SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):March 21, 2000
CITIZENS BANCORP
(Exact name of registrant as specified in its charter)
INDIANA
(State or other jurisdiction of incorporation)
0-23313 35-2017500
(Commission File Number) (IRS Employer Identification No.)
60 South Main Street
Frankfort, Indiana 46041
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (765) 654-8533
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Item 5. Other Events
On March 21, 2000, Citizens Bancorp (the "Registrant") and Lincoln
Bancorp ("Lincoln") jointly announced the signing of a definitive agreement (the
"Agreement") pursuant to which Registrant will be merged with and into Lincoln
(the "Merger"). The Agreement provides that upon the effective date of the
Merger (the "Effective Time"), each shareholder of Citizens will receive .9375
shares of Lincoln's common stock and $9.375 in cash for each share of Citizens
common stock owned by such shareholder. Based on the closing price of Lincoln on
March 21, 2000 ($9.75), the transaction is valued at $18.52 per share and has an
aggregate value of approximately $17.8 million (assuming all outstanding stock
options of the Registrant are valued at the difference between the merger
consideration and the exercise price of the options).
Pursuant to General Instruction F to Form 8-K, the press release issued
March 21, 2000, concerning the Merger is incorporated herein by reference and is
attached hereto as Exhibit 20.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 2 Agreement and Plan of Reorganization between
Citizens Bancorp and Lincoln Bancorp dated March
21, 2000.
Exhibit 20 Press Release dated March 21, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By:/s/ Fred W. Carter
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Fred W. Carter
Dated: March 23, 2000
AGREEMENT AND PLAN OF
REORGANIZATION
between
CITIZENS BANCORP
and
LINCOLN BANCORP
March 21, 2000
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TABLE OF CONTENTS
Article I Certain Definitions; Interpretation...............................1
1.01 Certain Definitions.................................1
1.02 Interpretation......................................7
Article II The Merger........................................................7
2.01 The Merger..........................................7
2.02 Reservation of Right to Revise Structure............8
2.03 Effective Time......................................8
2.04 Integration.........................................9
2.05 Accounting Treatment................................9
Article III Consideration.....................................................9
3.01 Consideration.......................................9
3.02 Rights as Shareholders; Stock Transfers............11
3.03 Fractional Shares..................................11
3.04 Exchange Procedures................................12
3.05 Anti-Dilution Adjustments..........................13
Article IV Actions Pending the Merger.......................................13
4.01 Forbearances of Citizens...........................13
4.02 Forbearances of Lincoln............................16
Article V Representations and Warranties...................................17
5.01 Disclosure Schedules...............................17
5.02 Standard...........................................17
5.03 Representations and Warranties of Citizens.........17
5.04 Representations and Warranties of Lincoln..........28
Article VI Covenants........................................................32
6.01 Reasonable Best Efforts............................32
6.02 Shareholder Approval...............................33
6.03 Registration Statement.............................33
6.04 Press Releases.....................................34
6.05 Access; Information................................34
6.06 Acquisition Proposals..............................35
6.07 Affiliate Agreements...............................36
6.08 NASDAQ Listing.....................................36
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6.09 Regulatory Applications............................36
6.10 D & O Insurance....................................36
6.11 Accountants' Letters...............................37
6.12 Notification of Certain Matters....................37
6.13 Advisory Directors.................................37
6.14 Stock Option Plan..................................38
6.15 Recognition and Retention Plan.....................38
6.16 ESOP...............................................39
6.17 Defined Benefit Pension Plan.......................39
6.18 Executive Supplemental Retirement
Income Agreements.............................40
6.19 Employee Matters...................................40
Article VII Conditions to Consummation of the Merger.........................42
7.01 Conditions to Each Party's Obligation
to Effect the Merger..........................42
7.02 Conditions to Obligation of Citizens...............44
7.03 Conditions to Obligation of Lincoln................45
Article VIII Termination......................................................46
8.01 Termination........................................46
8.02 Effect of Termination and Abandonment..............47
8.03 Termination Fee....................................47
Article IX Miscellaneous....................................................48
9.01 Survival...........................................48
9.02 Waiver; Amendment..................................48
9.03 Counterparts.......................................48
9.04 Governing Law......................................48
9.05 Expenses...........................................48
9.06 Notices............................................48
9.07 Entire Understanding;
No Third Party Beneficiaries..................49
List of Exhibits..............................................................52
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated as
of March 21, 2000, by and between CITIZENS BANCORP, an Indiana corporation with
its headquarters in Frankfort, Indiana ("Citizens") and LINCOLN BANCORP, an
Indiana corporation with its principal place of business in Plainfield, Indiana
("Lincoln").
W I T N E S S E T H :
A. Each of the parties desire to effect a merger of Citizens with and into
Lincoln, with Lincoln being the surviving entity in the merger (the "Merger").
B. Citizens owns all of the issued and outstanding capital stock of Citizens
Savings Bank of Frankfort, a federal savings bank with its headquarters in
Frankfort, Indiana ("Citizens Savings Bank"). Lincoln owns all of the issued and
outstanding capital stock of Lincoln Federal Savings Bank, a federal savings
bank with its headquarters in Plainfield, Indiana ("Lincoln Savings Bank"). In
addition to the Merger of Citizens and Lincoln, the parties desire to effect a
merger of Citizens Savings Bank with and into Lincoln Savings Bank, with Lincoln
Savings Bank being the surviving entity in the merger (the "Subsidiary Merger").
C. The Boards of Directors of Citizens and Lincoln, respectively, each have
determined that it is in the best interests of their respective corporations and
shareholders to effect the Merger and the Subsidiary Merger.
D. It is the intention of the parties to this Agreement that the business
combinations contemplated hereby each be treated as a "reorganization" under
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
Article I
Certain Definitions; Interpretation
1.01 Certain Definitions. The following terms are used in this Agreement with
the meanings assigned below:
(a) "Acquisition Proposal" has the meaning assigned in Section 6.06.
(b) "Agreement" means this Agreement, as amended or modified from time
to time in accordance with Section 9.02.
(c) "Ancillary Documents" means, when executed and delivered, the
Articles of Merger attached hereto as Exhibit A, the Subsidiary Merger
Articles of Consolidation attached hereto
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as Exhibit B, the Merger Agreement for Subsidiary Merger attached
hereto as Exhibit C, the Affiliate Agreement attached hereto as Exhibit
D, the Consulting Agreement attached hereto as Exhibit E, the Opinion
of Lincoln's Counsel, Bose McKinney & Evans LLP, attached hereto as
Exhibit F, and the Opinion of Citizens' Counsel, Barnes & Thornburg,
attached hereto as Exhibit G.
(d) "Change of Control" has the meaning assigned in Section 6.10(c).
(e) "Citizens" has the meaning assigned in the preamble to this
Agreement.
(f) "Citizens Affiliate" has the meaning assigned in Section 6.07.
(g) "Citizens Articles" means the Articles of Incorporation of
Citizens.
(h) "Citizens Board" means the Board of Directors of Citizens.
(i) "Citizens By-Laws" means the By-laws of Citizens, as and if
amended.
(j) "Citizens Common Stock" means the common stock, without par value
per share, of Citizens.
(k) "Citizens ESOP" has the meaning assigned in Section 6.16.
(l) "Citizens Preferred Stock" means the preferred stock, without par
value per share, of Citizens.
(m) "Citizens Reports" has the meaning assigned in Section 5.03(i).
(n) "Citizens Savings Bank" has the meaning assigned in the recitals to
this Agreement.
(o) "Citizens Stock Option" means each option to purchase shares of
Citizens Common Stock which is outstanding under the Citizen Stock Plan
on the date as of which this Agreement is made.
(p) "Citizens Stock Plan" means the Citizens Bancorp Stock Option Plan.
(q) "Citizens' SEC Documents" has the meaning assigned in Section
5.03(g).
(r) "Closing Date" has the meaning assigned in Section 2.03.
(s) "Code" has the meaning assigned in the recitals to this Agreement.
(t) "Compensation Plans" has the meaning assigned in Section 5.03(l).
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(u) "Consideration" has the meaning assigned in Section 3.01(a).
(v) "Consideration Ratio" has the meaning assigned in Section 3.01(c).
(w) "Contract" means, with respect to any person, any agreement,
indenture, undertaking, debt instrument, contract, lease or other
commitment to which such person or any of its Subsidiaries is a party
or by which any of them is bound or to which any of their properties is
subject.
(x) "Disclosure Schedule" has the meaning assigned in Section 5.01.
(y) "DOL" means the United States Department of Labor.
(z) "Effective Date" means the date on which the Effective Time occurs.
(aa) "Effective Time" means the date and time at which the Merger
becomes effective.
(bb) "Environmental Laws" means any federal, state or local law,
regulation, order, decree, permit, authorization, common law or agency
requirement with force of law relating to: (1) the protection or
restoration of the environment, health or safety (in each case as
relating to the environment) or natural resources; or (2) the handling,
use, presence, disposal, release or threatened release of any Hazardous
Substance.
(cc) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(dd) "ERISA Affiliate" has, with respect to any person, the meaning
assigned in Section 5.03(l).
(ee) "ERISA Affiliate Plan" has the meaning assigned in Section
5.03(l).
(ff) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
(gg) "Exchange Agent" means the entity selected by Lincoln to effect
the payment of the Consideration pursuant to Section 3.01.
(hh) "Exchange Fund" has the meaning assigned in Section 3.04(a).
(ii) "Exchange Ratio" has the meaning assigned in Section 3.01(a).
(jj) "Fee" has the meaning assigned in Section 8.03.
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(kk) "Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
(ll) "Hazardous Substance" means any substance in any concentration
that is: (1) listed, classified or regulated pursuant to any
Environmental Law; (2) any petroleum product or by- product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (3) any
other substance which is or may be the subject of regulatory action by
any Governmental Authority pursuant to any Environmental Law.
(mm) "Indemnified Person" has the meaning assigned in Section 5.03(l).
(nn) "IBCL" means the Indiana Business Corporation Law, I.C. 23-1-17-1
et seq.
(oo) "Insurance Amount" has the meaning assigned in Section 6.10(a).
(pp) "Insurance Policies" has the meaning assigned in Section 5.03(r).
(qq) "IRS" means the United States Internal Revenue Service.
(rr) "KBW" means Keefe, Bruyette & Woods, Inc.
(ss) "Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
(tt) "Lincoln" has the meaning assigned in the preamble to this
Agreement.
(uu) "Lincoln Articles" means the Articles of Incorporation of Lincoln.
(vv) "Lincoln Board" means the Lincoln Board of Directors.
(ww) "Lincoln By-Laws" means the By-Laws of Lincoln.
(xx) "Lincoln Common Stock" means the common stock, no par value, of
Lincoln.
(yy) "Lincoln Preferred Stock" means the preferred stock, no par value,
of Lincoln.
(zz) "Lincoln Savings Bank" has the meaning assigned in the recitals to
this Agreement.
(aaa) "Lincoln's SEC Documents" has the meaning assigned in Section
5.04(g).
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(bbb) "Loans" means loans, leases, extensions of credit, commitments to
extend credit and other assets.
(ccc) "Market Value" has the meaning, in respect of Lincoln Common
Stock and the Effective Date, assigned in Section 3.01(c).
(ddd) "Material Adverse Effect" means, with respect to Lincoln or
Citizens, any effect that (1) is both material and adverse to the
financial position, results of operations or business of Lincoln and
its Subsidiaries taken as a whole, or Citizens and its Subsidiaries
taken as a whole, respectively, other than (A) the effects of any
change attributable to or resulting from changes in economic
conditions, laws, regulations or accounting guidelines (generally
accepted accounting principles or otherwise) applicable to depository
institutions generally, or in general levels of interest rates, and (B)
payments associated with the Merger as contemplated by this Agreement;
or (2) would materially impair the ability of either Lincoln or
Citizens to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger
and the other transactions contemplated by this Agreement.
(eee) "Merger" has the meaning assigned in the preamble to this
Agreement.
(fff) "Multiemployer Plan" means, with respect to any person, a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(ggg) "NASDAQ" means The NASDAQ Stock Market.
(hhh) "New Certificates" has the meaning assigned in Section 3.04(a).
(iii) Non-Vested Citizens Stock Option means each Citizens Stock Option
which, as of the Effective Date, has not yet become exercisable.
(jjj) "Old Certificates" has the meaning assigned in Section 3.04(b).
(kkk) "OTS" means the Office of Thrift Supervision.
(lll) "PBGC" means the Pension Benefit Guaranty Corporation.
(mmm) "Pension Plan" has the meaning assigned in Section 5.03(l).
(nnn) "Per Share Cash Consideration" has the meaning assigned in
Section 3.01(a).
(ooo) "Per Share Stock Consideration" has the meaning assigned in
Section 3.01(a).
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(ppp) "Person" means any individual, bank, savings bank, corporation,
partnership, association, joint-stock company, business trust or
unincorporated organization.
(qqq) "Previously Disclosed" means, with respect to Citizens or
Lincoln, information set forth in such party's Disclosure Schedule.
(rrr) "Proxy Statement" has the meaning assigned in Section 6.03.
(sss) "Registration Statement" has the meaning assigned in Section
6.03.
(ttt) "Representatives" means, with respect to any person, such
person's directors, officers, employees, legal or financial advisors or
any representatives of such legal or financial advisors.
(uuu) "Rights" means, with respect to any person, securities or
obligations convertible into or exercisable or exchangeable for, or
giving any person any right to subscribe for or acquire, or any
options, calls or commitments relating to, or any stock appreciation
right or other instrument the value of which is determined in whole or
in part by reference to the market price or value of, shares of capital
stock of such person.
(vvv) "SEC" means the Securities and Exchange Commission.
(www) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
(xxx) "Subsidiary" and "Significant Subsidiary" have the meanings
assigned to them in Rule 1-02 of Regulation S-X of the SEC.
(yyy) "Subsidiary Merger" has the meaning assigned in the recitals to
this Agreement.
(zzz) "Superior Proposal" means an Acquisition Proposal made by a third
party after the date hereof which, in the good faith judgment of the
Board of Directors of the corporation receiving the Acquisition
Proposal, taking into account the various legal, financial and
regulatory aspects of the proposal and the person making such proposal,
(1) if accepted, is significantly more likely than not to be
consummated, and (2) if consummated, is reasonably likely to result in
a materially more favorable transaction than the Merger for the
applicable corporation and its shareholders and other relevant
constituencies.
(aaaa) "Surviving Corporation" has the meaning assigned in Section
2.01.
(bbbb) "Taxes" means all taxes, charges, fees, levies or other
assessments, however denominated, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, goods
and services, capital, transfer, franchise, profits, license,
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withholding, payroll, employment, employer health, excise, estimated,
severance, stamp, occupation, property or other taxes, custom duties,
fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
(cccc) "Tax Returns" has the meaning assigned in Section 5.03(o).
(dddd) "TRA" has the meaning assigned in Section 5.03(l).
(eeee) "Trident" means Trident Securities, a division of McDonald
Investments, Inc.
(ffff) Vested Citizens Stock Option means each Citizens Stock Option
which is or would have been but for its cancellation pursuant to
Section 3.01(b) exercisable as of the Effective Date.
1.02 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or
Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and are
not part of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." No rule of construction against the draftsperson
shall be applied in connection with the interpretation or enforcement of this
Agreement. Whenever this Agreement shall require a party to take an action, such
requirement shall be deemed to constitute an undertaking by such party to cause
its Subsidiaries, and to use its reasonable best efforts to cause its other
affiliates, to take appropriate action in connection therewith. References
herein to "transaction contemplated by this Agreement" shall be deemed to
include a reference to the Subsidiary Merger and the transactions contemplated
by the Ancillary Documents.
Article II
The Merger
2.01 The Merger. At the Effective Time, the business combination contemplated by
this Agreement shall occur and in furtherance thereof:
(a) Structure and Effects of the Merger. Citizens shall merge with and
into Lincoln, and the separate corporate existence of Citizens shall
thereupon cease. Lincoln shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the
State of Indiana, and the separate corporate existence of Lincoln with
all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. The Merger shall have the effects
specified in the IBCL.
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(b) Articles of Incorporation. The Lincoln Articles as in effect
immediately prior to the Effective Time shall continue to be the
articles of incorporation of the Surviving Corporation following the
Merger, until duly amended in accordance with the terms thereof and the
IBCL.
(c) By-Laws. The Lincoln By-laws as in effect immediately prior to the
Effective Time shall continue to be the by-laws of the Surviving
Corporation following the Merger, until duly amended in accordance with
the terms thereof and the Lincoln Articles.
(d) Directors. The directors of Lincoln immediately prior to the
Effective Time shall continue to hold such positions following the
Merger, and such directors shall hold office until such time as their
successors shall be duly elected and qualified; provided, however, that
Fred Carter (or in the event he is not able to serve, another director
of Citizens, selected in the sole discretion of the Citizens Board
prior to the Effective Time) shall be appointed to the Board of
Directors of Lincoln and Lincoln Savings Bank for a two year term
ending in 2002 effective as of the Effective Time. Following his
service as a director of Lincoln and Lincoln Savings Bank, Fred Carter
shall be appointed as a director emeritus of the Board of Directors of
Lincoln Savings Bank to serve for at least one additional year in such
position.
(e) Officers. The officers of Lincoln holding such positions
immediately prior to the Effective Time shall continue to be the
officers of the Surviving Corporation following the Merger.
2.02 Reservation of Right to Revise Structure. At Lincoln's election, the Merger
may alternatively be structured so that (a) Citizens is merged with and into any
other direct or indirect wholly owned subsidiary of Lincoln or (b) any direct or
indirect wholly owned subsidiary of Lincoln is merged with and into Citizens;
provided, however, that no such change shall (x) alter or change the amount or
kind of the Consideration or the treatment of the holders of Citizens Common
Stock or Citizens Stock Options, (y) prevent the parties from obtaining the
opinions of Bose McKinney & Evans LLP and Barnes & Thornburg referred to in
Sections 7.02(d) and 7.03(d), respectively, or (z) materially impede or delay
consummation of the transactions contemplated by this Agreement. In the event of
such an election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
2.03 Effective Time. The Merger shall become effective upon the filing, in the
office of the Secretary of State of the State of Indiana, of Articles of Merger
in accordance with IBCL Section 23-1-40-5, or at such later date and time as may
be set forth in such articles, which articles shall be in substantially the same
form as that attached hereto as Exhibit A. Subject to the terms of this
Agreement, the parties shall cause the Merger to become effective (a) on the
date that is the fifth full NASDAQ trading day (the "Closing Date") to occur
after the last of the conditions set forth in Article VII (other than conditions
relating solely to the delivery of documents dated the Effective Date) shall
have been satisfied or waived in accordance with the terms of this Agreement, or
(b) on such date as the parties may agree in writing.
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2.04 Integration. At the Effective Time, the parties hereto currently intend to
effectuate, or cause to be effectuated, the Subsidiary Merger, pursuant to
Articles of Merger substantially in the form attached hereto as Exhibit B and a
merger agreement substantially in the form attached hereto as Exhibit C. The
parties agree to cooperate and to take all reasonable actions prior to or
following the Effective Time, including executing all requisite documentation,
as may be reasonably necessary to effect the Subsidiary Merger. Citizens also
agrees to cooperate with Lincoln and to take all reasonable restructuring steps
for regulatory purposes, as may be reasonably requested by Lincoln to merge or
otherwise consolidate such legal entities to the extent desirable for regulatory
or other reasons.
2.05 Accounting Treatment. The combination of Lincoln and Citizens effected by
the Merger will be accounted for under the purchase method of accounting.
Article III
Consideration
3.01 Consideration.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time:
(1) Each share of Citizens Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares
held as treasury stock of Citizens and shares held directly or
indirectly by Lincoln, except shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted,
if any) shall become and be converted into the right to
receive, subject to adjustment as set forth in Section 3.05:
(A) .9375 shares (the "Exchange Ratio") of Lincoln
Common Stock (the "Per Share Stock Consideration"),
and
(B) $9.375 in cash (such sum, the "Per Share Cash
Consideration" and together with the Per Share Stock
Consideration, the "Consideration"); and
(2) Each share of Citizens Common Stock that, immediately
prior to the Effective Time, is held as treasury stock of
Citizens or held directly or indirectly by Lincoln, other than
shares held in a fiduciary capacity or in satisfaction of a
debt previously contracted, shall by virtue of the Merger be
canceled and retired and shall cease to exist, and no exchange
or payment shall be made therefor.
(3) Notwithstanding the foregoing, if any holders of Citizens
Common Stock dissent from the Merger and demand dissenters'
rights under the IBCL, any issued
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and outstanding shares of Citizens Common Stock held by such
dissenting holders shall not be converted as described in this
Section 3.01(a) but shall from and after the Effective Time
represent only the right to receive such consideration as may
be determined to be due to such dissenting holders pursuant to
IBCL; provided, however, that each share of Citizens Common
Stock outstanding immediately prior to the Effective Time and
held by a dissenting holder who shall, after the Effective
Time, withdraw his or her demand for dissenters' rights or
lose his or her right to exercise dissenters' rights shall
have only such rights as are provided under the IBCL.
(b) At the Effective Time, Citizens and Lincoln shall take all action
necessary to cause each Vested Citizens Stock Option, without any
action on the part of the holder thereof, to be converted into the
right to receive from Citizens, at the Effective Time, an amount in
cash equal to the excess of $18.75 over the per share exercise price
for the share of Citizens Common Stock subject to such Vested Citizens
Stock Option; provided however, that the payer shall withhold from such
cash payment any taxes required to be withheld by applicable law. Each
Vested Citizens Stock Option to which this paragraph applies will be
canceled and shall cease to exist by virtue of such payment.
(c) At the Effective Time, each Non-Vested Citizens Stock Option shall
be converted into an option (a "Replacement Option") to acquire, on the
same terms and conditions as were applicable under such Citizens Stock
Option, a specified number of shares of Lincoln Common Stock, at a
specified exercise price per share. In respect of each option under a
single grant agreement outstanding to the same holder, such number
shall be determined by multiplying the number of shares of Citizens
Common Stock subject to such options granted under the same grant
agreement by the Consideration Ratio and rounding such product to the
nearest whole number, and such exercise price per share shall be
determined by dividing the per share exercise price under such Citizens
Stock Option or set of identical Citizens Stock Options by the
Consideration Ratio and rounding such quotient to the nearest whole
cent. As used herein, the Consideration Ratio means (ab+c)/b, where "a"
equals the Exchange Ratio, "b" equals the per share Market Value (as
hereinafter defined) of Lincoln Common Stock on the Effective Date, and
"c" equals the Per Share Cash Consideration. For example, if the per
share Market Value of Lincoln Common Stock on the Effective Date is
$10.00 (indicating a Consideration Ratio of 1.875), a Non-Vested
Citizens Stock Option to purchase 200 shares of Citizens Common Stock
at an exercise price of $15.25 per share would be converted into an
option to purchase 375 shares of Lincoln Common Stock at an exercise
price of $8.13 per share. As used herein, "Market Value" means, with
reference to a share of Lincoln Common Stock and the Effective Date,
the average of the high bid and low asked price per share (the "average
price") of Lincoln Common Stock on such date, or, if no such average
price can be determined for such date, the most recent reported sale
price per share within the preceding ten business days, or, if no such
sale shall have occurred, the average price on the most recent day
within such preceding ten business days for which the average price can
be determined, or, if no such average price can be determined, the per
share fair market value of Lincoln Common Stock on such date as
determined in good faith by the
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Lincoln Board. Notwithstanding the foregoing, each Non-Vested Citizens
Stock Option which is intended to be an "incentive stock option" (as
defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code. Accordingly, with
respect to "incentive stock options," fractional shares will be rounded
down to the nearest whole number of shares and where necessary the per
share exercise price will be rounded up to the nearest cent. At or
prior to the Effective Time, Citizens and its Subsidiaries may modify
any or all outstanding Non-Vested Citizens Stock Options held by
employees of Citizens and its Subsidiaries who become employees of
Lincoln or its Subsidiaries on the Effective Date to provide that they
shall become exercisable, subject to any applicable bank regulatory
requirements, in full in the event the optionee's qualifying service
with Lincoln and its Subsidiaries is terminated by Lincoln or its
Subsidiaries without cause or by the optionee for good reason, in which
case the Replacement Option shall reflect the terms and conditions of
the Non-Vested Citizens Stock Option as so modified. At the Effective
Time, Lincoln shall assume the Citizens Stock Plan; provided, however,
that such assumption shall be only in respect of the Replacement
Options and that Lincoln shall have no obligation with respect to any
awards under the Citizens Stock Plan other than the Replacement Options
and shall have no obligation to make any additional grants or awards
under such assumed Citizens Stock Plan; provided further, that service
as an advisory director of Lincoln Savings Bank provided for in Section
6.13 below, service as a member of the Lincoln Board, and service as a
member or member emeritus of the Board of Directors of Lincoln Savings
Bank all shall constitute "service as a director or director emeritus
of the Holding Company or its Subsidiaries" for purposes of determining
when a Replacement Option terminates. At all times after the Effective
Time, Lincoln shall reserve for issuance such number of shares of
Lincoln Common Stock as are needed to permit the Replacement Options to
be exercised in the manner contemplated by this Agreement and the
instruments pursuant to which such options were granted. Lincoln shall
file with the SEC a registration statement on an appropriate form under
the Securities Act (which may simply consist of a post-effective
amendment to the Registration Statement) with respect to the shares of
Lincoln Common Stock subject to the Replacement Options and shall use
its reasonable best efforts to maintain the current status of the
prospectus contained therein, as well as comply with any applicable
state securities or "blue sky" laws, for so long as such options remain
outstanding.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time, (a) holders
of Citizens Common Stock shall cease to be, and shall have no rights as,
shareholders of Citizens, other than the right to receive (1) any dividend or
other distribution with respect to such Citizens Common Stock with a record date
occurring prior to the Effective Time and (2) the consideration provided under
this Article III, and (b) holders of Citizens Stock Options shall have no
further or continuing right to receive Citizens Common Stock, Lincoln Common
Stock or any form of consideration other than the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of Citizens or the Surviving Corporation of shares of
Citizens Common Stock, and no attempted or purported exercise of Citizens Stock
Options shall be effective.
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3.03 Fractional Shares. Notwithstanding any other provision in this Agreement,
no fractional shares of Lincoln Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Lincoln shall pay to each holder of Citizens Common Stock who otherwise
would be entitled to a fractional share of Lincoln Common Stock an amount in
cash (without interest) determined by multiplying such fraction by $18.75.
3.04 Exchange Procedures.
(a) At or prior to the Effective Time, Lincoln shall deposit, or shall
cause to be deposited, with the Exchange Agent, certificates
representing the shares of Lincoln Common Stock ("New Certificates")
and an estimated amount of cash to be issued as Consideration (such
cash and New Certificates, together with any dividends or distributions
with a record date occurring after the Effective Date with respect
thereto (without any interest on any such cash, dividends or
distributions), being hereinafter referred to as the "Exchange Fund").
(b) The Surviving Corporation shall cause the New Certificates into
which shares of a shareholder's Citizens Common Stock are converted on
the Effective Date and/or any check in respect of any Per Share Cash
Consideration, fractional share interests or dividends or distributions
which such person shall be entitled to receive to be delivered to such
shareholder upon delivery (if not previously delivered) to the Exchange
Agent of certificates representing such shares of Citizens Common Stock
("Old Certificates") (or indemnity satisfactory to the Surviving
Corporation and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such shareholder. No interest will
be paid on any Consideration that any such person shall be entitled to
receive pursuant to this Article III upon such delivery.
(c) As soon as reasonably practicable but in no event more than ten
calendar days after the Effective Time, the Exchange Agent shall mail
to each record holder of any certificate or certificates whose shares
of Citizens Common Stock were converted into the right to receive the
Consideration, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Old
Certificates shall pass, only upon proper delivery of the Old
Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Citizens may reasonably specify) and
instructions for use in effecting the surrender of the Old Certificates
in exchange for the Consideration.
(d) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Citizens Common
Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(e) No dividends or other distributions on Lincoln Common Stock with a
record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of
Citizens Common Stock converted in the Merger into the right to receive
shares of such Lincoln Common Stock until the holder thereof shall be
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entitled to receive New Certificates in exchange therefor in accordance
with this Article III. After becoming so entitled in accordance with
this Article III, the record holder thereof also shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of
Lincoln Common Stock such holder had the right to receive upon
surrender of the Old Certificate.
(f) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Citizens for six months after the Effective Time shall
be returned to Lincoln. Any shareholders of Citizens who have not
theretofore complied with this Article III shall thereafter look only
to Lincoln for payment of Per Share Stock Consideration, Per Share Cash
Consideration, cash in lieu of any fractional shares and unpaid
dividends and distributions on Lincoln Common Stock deliverable in
respect of each share of Citizens Common Stock such shareholder holds
as determined pursuant to this Agreement, in each case, without any
interest thereon.
3.05 Anti-Dilution Adjustments. Should Lincoln change (or establish a record
date for changing) the number of shares of Lincoln Common Stock issued and
outstanding prior to the Effective Date by way of a stock split, stock dividend,
recapitalization or similar transaction with respect to the outstanding Lincoln
Common Stock, and the record date therefor shall be prior to the Effective Date,
the Exchange Ratio shall be proportionately adjusted.
Article IV
Actions Pending the Merger
4.01 Forbearances of Citizens. From the date hereof until the earlier of the
termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement or the Disclosure Schedule, without the prior
written consent of Lincoln, Citizens will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Citizens and its
Subsidiaries other than in the ordinary and usual course or, to the
extent consistent therewith, fail to use reasonable efforts to preserve
intact their business organizations and assets and maintain their
rights, franchises and existing relations with customers, suppliers,
employees and business associates.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (1) issue, sell or otherwise permit
to become outstanding, or authorize the creation of, any additional
shares of Citizens Common Stock or any Rights with respect to Citizens
Common Stock, (2) permit any additional shares of Citizens Common Stock
to become subject to new grants of employee or director stock options,
other Rights or similar stock-based employee rights, (3) repurchase,
redeem or otherwise acquire, directly or indirectly, any shares of
Citizens Common Stock, (4) effect any recapitalization,
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reclassification, stock split or like change in capitalization, or (5)
enter into, or take any action to cause any holders of Citizens Common
Stock to enter into, any agreement, understanding or commitment
relating to the right of holders of Citizens Common Stock to vote any
shares of Citizens Common Stock, or cooperate in any formation of any
voting trust relating to such shares.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, other than (1) regular quarterly cash dividends on Citizens
Common Stock in an amount not to exceed $0.07 per share paid with
record and payment dates consistent with past practice and (2)
dividends from wholly owned Subsidiaries to Citizens or another wholly
owned Subsidiary of Citizens, as applicable (in each case consistent
with past practice), on or in respect of, any shares of its capital
stock, or declare or make any other distribution on any shares of its
capital stock, or split, combine, redeem, reclassify, purchase or
otherwise acquire any shares of its capital stock.
(d) Compensation; Employment Contracts; Etc. Enter into, amend, modify,
renew or terminate any employment, consulting, severance or similar
Contracts with any directors, officers or employees of, or independent
contractors with respect to, Citizens or its Subsidiaries, or grant any
salary, wage or other increase or increase any employee benefit
(including incentive or bonus payments), except (1) for normal general
increases in salary to individual employees in the ordinary course of
business consistent with past practice, (2) for other changes that are
required by applicable law, (3) to satisfy Previously Disclosed
Contracts existing on the date hereof, (4) for benefit increases
contemplated in Section 3.01(c) above or Sections 6.15, 6.16, 6.17 and
6.18 below, or (5) to provide, if the Effective Time occurs prior to
December 31, 2000, that Fred W. Carter's base compensation for the
portion of calendar year 2000 prior to the Effective Time shall be
$155,000 (which base compensation shall be paid by Citizens prior to
the Effective Time).
(e) Benefit Plans. Enter into, establish, adopt, amend, modify or
terminate any pension, retirement, stock option, stock purchase,
savings, profit sharing, employee stock ownership, deferred
compensation, consulting, bonus, group insurance or other employee or
director benefit, incentive or welfare Contract, plan or arrangement,
or any trust agreement (or similar arrangement) related thereto, or
make any new or increase any outstanding grants or awards under any
such Contract, plan or arrangement, in respect of any current or former
directors, officers or employees of, or independent contractors with
respect to, Citizens or its Subsidiaries (or any dependent or
beneficiary of any of the foregoing persons), including taking any
action that accelerates the vesting or exercisability of or the payment
or distribution with respect to, stock options, restricted stock or
other compensation or benefits payable thereunder, except, in each such
case, (1) as may be required by applicable law or to satisfy Previously
Disclosed Contracts existing on the date hereof or (2) as are provided
for in Section 3.01(b) or 3.01(c) above or Section 6.15, 6.16, 6.17 or
6.18 below.
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(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, lease, encumber or otherwise dispose of or discontinue any
material portion of its assets, business or properties.
(g) Acquisitions. Except (1) pursuant to Previously Disclosed Contracts
existing on the date hereof, (2) for short-term investments for cash
management purposes, (3) pursuant to bona fide hedging transactions, or
(4) by way of foreclosures or otherwise in satisfaction of debts
previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice, neither
Citizens nor any of its Subsidiaries will acquire any assets,
properties or deposits of another person in any one transaction or a
series of related transactions which otherwise would not be permitted
by this Section 4.01.
(h) Governing Documents. Amend the Citizens Articles, Citizens By-laws
or the articles of incorporation or by-laws (or similar governing
documents) of any of Citizens' Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in the accounting
principles, practices or methods used by Citizens and its Subsidiaries,
other than as may be required by generally accepted accounting
principles, as concurred with by Citizens' independent auditors.
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material Contract or
amend or modify in any material respect any of its existing material
Contracts.
(k) Claims. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an
amount, individually or in the aggregate, that is not material to
Citizens and its Subsidiaries, taken as a whole.
(l) Risk Management. Except as required by applicable law or
regulation: (1) implement or adopt any material change in its interest
rate risk management and hedging policies, procedures or practices; (2)
fail to follow its existing policies or practices with respect to
managing its exposure to interest rate risk; or (3) fail to use
commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.
(m) Indebtedness. Other than in the ordinary course of business
(including creation of deposit liabilities, entry into repurchase
agreements, purchases or sales of federal funds, Federal Home Loan Bank
advances, and sales of certificates of deposit) consistent with past
practice, (1) incur any indebtedness for borrowed money, (2) assume,
guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other Person or (3) cancel, release, assign
or modify any material amount of indebtedness of any other Person.
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(n) Loans. Make any loan or advance (1) other than in the ordinary
course of business consistent with lending policies as in effect on the
date hereof or (2) without prior consultation with Lincoln, other than
residential mortgage loans, in excess of $250,000; provided that in the
case of clause (1) Citizens or any of its Subsidiaries may make any
such loan in the event (A) Citizens or any of its Subsidiaries has
delivered to Lincoln or its designated representative a notice of its
intention to make such loan and such additional information as Lincoln
or its designated representative may reasonably require and (B) Lincoln
or its designated representative shall not have reasonably objected to
such loan by giving notice of such objection within three business days
following the delivery to Lincoln of the applicable notice of
intention.
(o) Adverse Actions. (1) Take any action reasonably likely to prevent
or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code; or (2) take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in
Article VII not being satisfied or (C) a material breach of any
provision of this Agreement; except, in each case, as may be required
by applicable law.
(p) Commitments. Agree or commit to do, or enter into any Contract
regarding, anything that would be precluded by clauses (a) through (o)
without first obtaining Lincoln's consent.
4.02 Forbearances of Lincoln. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of Citizens, Lincoln will not, and will cause each of its Subsidiaries
not to:
(a) Ordinary Course. Conduct the business of Lincoln and its
Subsidiaries other than in the ordinary and usual course or, to the
extent consistent herewith, fail to use reasonable efforts to preserve
intact their business organizations and assets and maintain their
rights, franchises and existing relations with customers, suppliers,
employees and business associates.
(b) Adverse Actions. (1) Take any action reasonably likely to prevent
or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code; or (2) take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in
Article VII not being satisfied or (C) a material breach of any
provision of this Agreement; except, in each case, as may be required
by applicable law.
(c) Governing Documents. Amend the Lincoln Articles or the Lincoln
By-Laws in a manner that would be materially adverse to the holders of
Lincoln Common Stock.
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(d) Commitments. Agree or commit to do, or enter into any Contract
regarding, anything that would be precluded by clauses (a) through (c)
without first obtaining Citizens' consent.
Article V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, Citizens has
delivered to Lincoln and Lincoln has delivered to Citizens a schedule
(respectively, each party's "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (1) in
response to an express disclosure requirement contained in a provision hereof or
(2) as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04, respectively, or to one or more of its covenants contained
in Article IV.
5.02 Standard. No representation or warranty of Citizens or Lincoln contained in
Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no party hereto
shall be deemed to have breached a representation or warranty, as a consequence
of the existence of any fact, event or circumstance unless such fact, event or
circumstance is not Previously Disclosed.
5.03 Representations and Warranties of Citizens. Except as Previously Disclosed,
Citizens hereby represents and warrants to Lincoln:
(a) Organization, Standing and Authority. Citizens is duly organized,
validly existing and in good standing under the laws of the State of
Indiana, and is duly qualified to do business and is in good standing
in all the jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.
(b) Citizens Stock. As of the date hereof, the authorized capital stock
of Citizens consists solely of 5,000,000 shares of Citizens Common
Stock, of which 959,401 shares are outstanding as of the date hereof,
and 2,000,000 shares of Citizens Preferred Stock, of which no shares
are outstanding on the date hereof. As of the date hereof, no shares of
Citizens Common Stock are held in treasury by Citizens. The outstanding
shares of Citizens Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable, and subject to no
preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, there are no shares of Citizens Common
Stock or Preferred Stock authorized and reserved for issuance, Citizens
does not have any Rights issued or outstanding with respect to Citizens
Common Stock or Preferred Stock, and Citizens does not have any
commitment to authorize, issue or sell any Citizens Common Stock,
Preferred Stock or Rights, except pursuant to this Agreement. The
Disclosure Schedule sets forth the number of shares of Citizens Common
Stock and Preferred Stock which are issuable and reserved for issuance
upon exercise of Citizens Stock Options as of the date hereof and the
exercise price of such Citizens Stock Options.
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(c) Subsidiaries.
(1) (A) The Disclosure Schedule sets forth all of Citizens'
Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) Citizens owns, directly or
indirectly, all the issued and outstanding equity securities
of each of its Subsidiaries, (C) no equity securities of any
of Citizens' Subsidiaries are or may become required to be
issued (other than to it or its Subsidiaries) by reason of any
Rights, (D) there are no contracts, commitments,
understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer
any equity securities of any such Subsidiaries (other than to
it or its Subsidiaries), (E) there are no contracts,
commitments, understandings, or arrangements relating to
Citizens' rights to vote or to dispose of such securities
(other than to Citizens or its Subsidiaries), and (F) all the
equity securities of each such Subsidiary held by Citizens or
its Subsidiaries are fully paid and nonassessable and are
owned by Citizens or its Subsidiaries free and clear of any
Liens.
(2) The Disclosure Schedule describes all equity securities
and interests in a partnership or joint venture of any kind in
which Citizens owns, directly or indirectly, a beneficial
interest, and Citizens has provided to Lincoln all material
information or agreements pertaining to such interests.
(3) Each of Citizens' Subsidiaries has been duly organized and
is validly existing and in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do
business and in good standing in all the jurisdictions where
its ownership or leasing of property or assets or the conduct
of its business requires it to be so qualified.
(d) Corporate Power. Citizens and each of its Subsidiaries has the
requisite power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; Citizens has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby; and Citizens Savings Bank has the requisite power
and authority to execute, deliver and perform its obligations as set
forth in the form of Subsidiary Merger Agreement attached hereto as
Exhibit C and to consummate the transactions contemplated thereby.
(e) Corporate Authority and Action.
(1) Citizens has the requisite corporate power and authority,
and has taken all corporate action necessary, in order (A) to
authorize the execution and delivery of, and performance of
its obligations under, this Agreement, and (B) subject only to
receipt of the approval of the plan of merger contained in
this Agreement by the holders of a majority of the outstanding
shares of Citizens Common Stock, to
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consummate the Merger. This Agreement and the Ancillary
Documents to which Citizens is a party each constitute and/or
will constitute the valid and legally binding obligation of
Citizens, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general
applicability relating to or affecting creditors' rights or by
general equity principles).
(2) Citizens has received the opinion of Trident, dated the
date of this Agreement, to the effect that, as of the date of
this Agreement, the Consideration to be received in the Merger
by the shareholders of Citizens is fair to the shareholders of
Citizens from a financial point of view.
(f) Regulatory Filings; No Defaults.
(1) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are
required to be made or obtained by Citizens or any of its
Subsidiaries in connection with the execution, delivery or
performance by Citizens of this Agreement, or to consummate
the Merger and the other transactions contemplated hereby,
except for (A) the filing with, and declaration of
effectiveness by, the SEC of the Registration Statement, (B)
the filing of applications with and receipt of approval
thereof from the OTS with respect to the Merger and the
Subsidiary Merger, (C) the filing of articles of merger with
the Secretary of State of the State of Indiana pursuant to the
IBCL and the filing of articles of combination with the OTS
with respect to the Subsidiary Merger, (D) the filing of a
notice with the NASDAQ with respect to the listing for trading
of the shares of Lincoln Common Stock to be issued in the
Merger on the National Market System, and (E) such other
filings, approvals, consents or waivers as are required under
applicable law in connection with the transactions
contemplated by this Agreement. As of the date hereof,
Citizens is not aware of any reason why the approvals of all
Governmental Authorities necessary to permit consummation of
the transactions contemplated by this Agreement will not be
received without the imposition of a condition or requirement
described in Section 7.01(b).
(2) Subject to receipt of the regulatory approvals and
expiration of the waiting periods referred to in the preceding
paragraph and the making of required filings under federal and
state securities laws, the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to
any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
material Contract of Citizens or of any of its Subsidiaries or
to which Citizens or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or
a default under, the Citizens Articles or the Citizens
By-laws, or (C)
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require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or
license or Contract.
(g) SEC Documents; Financial Statements.
(1) Citizens' Annual Reports on Form 10-K and proxy statements
on Form 14-A for the fiscal years ended June 30,1997, 1998 and
1999, quarterly reports on Form 10-Q for the fiscal years
ended June 30, 1998 and 1999, and all other reports,
registration statements, definitive proxy statements or
information statements filed or to be filed by Citizens or any
of its Subsidiaries subsequent to June 30, 1999 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, in the form filed or to be filed
(collectively, the "Citizens' SEC Documents") with the SEC, as
of the date filed, (A) complied or will comply with the
applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not (or if
amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
each of the balance sheets contained in or incorporated by
reference into any such Citizens' SEC Document (including the
related notes and schedules thereto) fairly presents, or will
fairly present, the financial position of Citizens and its
Subsidiaries as of its date, and each of the statements of
income and changes in shareholders' equity and cash flows or
equivalent statements in such of Citizens' SEC Documents
(including any related notes and schedules thereto) fairly
presents, or will fairly present, the results of operations,
changes in shareholders' equity and changes in cash flows, as
the case may be, of Citizens and its Subsidiaries for the
periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in
the case of unaudited statements.
(2) Since June 30, 1999 on a consolidated basis Citizens and
its Subsidiaries have not incurred any material liability
other than in the ordinary course of business consistent with
past practice.
(3) Since June 30, 1999 (A) Citizens and its Subsidiaries have
conducted their respective businesses in the ordinary and
usual course consistent with past practice and (B) no event
has occurred or circumstance arisen that, individually or
taken together with all other facts, events and circumstances
(described in any paragraph of Section 5.03 or otherwise), has
had or is reasonably likely to have a Material Adverse Effect
with respect to Citizens.
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(h) Litigation. Except as disclosed in Citizens' SEC Documents filed
before the date hereof, no litigation, claim or other proceeding before
any court, arbitrator or Governmental Authority is pending against
Citizens or any of its Subsidiaries and, to Citizens' knowledge, no
such litigation, claim or other proceeding has been threatened, which
would have a Material Adverse Effect with respect to Citizens.
(i) Compliance with Laws. Citizens and each of its Subsidiaries:
(1) conducts its business in compliance in all material
respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the
Equal Credit Opportunity Act, the Fair Housing Act, the Home
Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business
practices;
(2) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities required in
order to permit them to own or lease their properties and to
conduct their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to Citizens'
knowledge, no suspension or cancellation of any of them is
threatened;
(3) has received, since December 31, 1997, no notification or
communication from any Governmental Authority (A) asserting
that Citizens or any of its Subsidiaries is not in compliance
with any of the statutes, regulations, or ordinances that such
Governmental Authority enforces or (B) threatening to revoke
any license, franchise, permit, or governmental authorization
(nor, to Citizens' knowledge, do grounds for any of the
foregoing exist), or (C) restricting or disqualifying their
activities (except for restrictions generally imposed by rule,
regulation or administrative policy on banking organizations
generally);
(4) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Governmental
Authority against Citizens, any of its Subsidiaries or any
officer, director or employee thereof;
(5) is not subject to any order or decree issued by, or a
party to any agreement or memorandum of understanding with, or
a party to any commitment letter or similar undertaking to, or
subject to any order or directive by, a recipient of any
supervisory letter from or has adopted any board resolutions
at the request of any Governmental Authority, or been advised
by any Governmental Authority that it is considering issuing
or requesting any such agreement or other action or have
knowledge of any pending or threatened regulatory
investigation; and
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(6) since December 31, 1996, has timely filed all reports,
registrations and statements, together with any amendments
required to be made with respect thereto, that were required
to be filed under any applicable law, regulation or rule, with
any applicable Governmental Authority (collectively, the
"Citizens Reports"). As of their respective dates, Citizens
Reports complied in all material respects with the applicable
statutes, rules, regulations and orders enforced or
promulgated by the regulatory authority with which they were
filed.
(j) Material Contracts; Defaults. The Disclosure Schedule sets forth a
complete and accurate list of the following categories of material
Contracts to which Citizens or any of its Subsidiaries is a party:
(1) any Contract that (A) is not terminable at will both
without cost or other liability to Citizens or any of its
Subsidiaries and upon notice of ninety (90) days or less and
(B) which provides for fees or other payments in excess of
$30,000 per annum or in excess of $50,000 for the remaining
term of the Contract;
(2) any Contract with a term beyond the Effective Time under
which Citizens or any of its Subsidiaries created, incurred,
assumed, or guaranteed (or may create, incur, assume, or
guarantee) indebtedness for borrowed money (including
capitalized lease obligations) in an amount in excess of
$30,000;
(3) any Contract restricting the conduct of business by
Citizens or any of its Subsidiaries;
(4) any Contract to which Citizens or any of its Subsidiaries
is a party, on the one hand, and under which any affiliate,
officer, director, employee, or any person who owns more than
10% of the outstanding Citizens Common Stock or any of its
Subsidiaries, on the other hand, is a party or beneficiary;
(5) any Contract with respect to the employment of, or payment
to, any present or former directors, officers, employees or
consultants relating to their services as such with Citizens
or any Subsidiary; and
(6) any Contract involving the purchase or sale of assets with
a book value greater than $50,000 entered into since December
31, 1998.
Neither Citizens nor any of its Subsidiaries nor, to Citizens'
knowledge, any other party thereto is in default under any such
Contract and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.
(k) Properties. Except as disclosed in the financial statements filed
in its SEC Documents on or before the date hereof, Citizens and its
Subsidiaries have good and marketable title,
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free and clear of all Liens (other than Liens for current taxes not yet
delinquent, or Liens held by Citizens or its Subsidiaries) to all of
the material properties and assets, tangible or intangible, reflected
in such financial statements as being owned by Citizens and its
Subsidiaries as of the dates thereof. All buildings and all fixtures,
equipment, and other property and assets which are material to its
business and are held under leases or subleases by any of Citizens and
its Subsidiaries are held under valid leases or subleases enforceable
in accordance with their respective terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and to
general equity principles).
(l) Employee Benefit Plans.
(1) Citizens' Disclosure Schedule contains a complete list of
all bonus, vacation, deferred compensation, commission-based
compensation, pension, retirement, profit- sharing, thrift,
savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock appreciation and stock
option plans, all employment or severance contracts, all
medical, dental, disability, severance, health and life
insurance plans, all other employee benefit and fringe benefit
plans, contracts or arrangements and any "change of control"
or similar provisions in any plan, contract or arrangement
maintained or contributed to by Citizens or any of its
Subsidiaries for the benefit of current or former officers,
employees or directors or the beneficiaries or dependents of
any of the foregoing (collectively, "Compensation Plans").
(2) With respect to each Compensation Plan, if applicable,
Citizens has provided or made available to Lincoln, true and
complete copies of existing: (A) Compensation Plan documents
and amendments thereto; (B) trust instruments and insurance
contracts; (C) the most recent Form 5500 filed with the IRS;
(D) the most recent actuarial report and financial statement;
(E) the most recent summary plan description; (F) forms filed
with the PBGC (other than for premium payments); (G) the most
recent determination letter issued by the IRS; (H) any Form
5310 or Form 5330 filed with the IRS; and (I) documentation
relating to loans made to Citizens' employee stock ownership
plan and schedules supporting all allocations made under such
plan and compliance under Sections 404 and 415 of the Code.
Each Form 5500, actuarial report and financial statement
referred to in the preceding sentence accurately reflects the
contributions, liabilities and funding levels of the
applicable Compensation Plan.
(3) Each of the Compensation Plans has been administered and
operated in all material respects in accordance with the terms
thereof and with applicable law, including ERISA, the Code and
the Securities Act. Neither Citizens, any of its Subsidiaries
nor any other person for whom indemnification by Citizens or
any of its Subsidiaries could apply ("Indemnified Person") has
incurred or is likely to incur fiduciary liability under Part
4 of Title I of ERISA with respect to any Compensation
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Plan. Each of the Compensation Plans which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter from the IRS with respect to "TRA" (as
defined in Section 1 of IRS Revenue Procedure 93-39), and,
except as Previously Disclosed, Citizens is not aware of any
circumstances that would likely result in the revocation or
denial of any such favorable determination letter. None of
Citizens, any of its Subsidiaries or an Indemnified Person has
engaged in any transaction or taken any action with respect to
any Compensation Plan that has subjected, or could, to
Citizens' knowledge, subject Citizens or any of its
Subsidiaries or any Indemnified Person to a tax or penalty
imposed by either Section 4975 of the Code or Section 502 of
ERISA. There is no pending or, to Citizens' knowledge,
threatened litigation or governmental audit, examination or
investigation relating to Citizens' Compensation Plans.
(4) No liability under Title IV of ERISA (other than premiums
to the PBGC) has been or is reasonably expected to be incurred
by Citizens or any of its Subsidiaries with respect to any
"single-employer plan" (within the meaning of Section
4001(a)(15) of ERISA) or Multiemployer Plan currently or
formerly maintained or contributed to by any of them, or the
single-employer plan or Multiemployer Plan of any entity (an
"ERISA Affiliate") which is considered one employer with
Citizens under Section 4001(a)(14) of ERISA or Section 414(b)
or (c) of the Code (an "ERISA Affiliate Plan"). No notice of a
"reportable event," within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or
any ERISA Affiliate within the 12-month period ending on the
date hereof. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to
Citizens' knowledge, no condition exists that presents a
material risk that such proceedings will be instituted. To the
knowledge of Citizens, there is no pending investigation or
enforcement action by the PBGC, the DOL or IRS or any other
governmental agency with respect to any Compensation Plan.
(5) All contributions, premiums and payments required to have
been made under the terms of any of the Compensation Plans or
applicable law have been timely made or reflected in Citizens'
SEC Documents. Neither any of the Pension Plans nor ERISA
Affiliate Plans has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. None of Citizens, any of its
Subsidiaries or any ERISA Affiliate has provided, or is
required to provide, security to, nor are there any
circumstances requiring, or which can reasonably be expected
to result in, the imposition of any lien on the assets of
Citizens or any of its Subsidiaries with respect to, any
Pension Plan or any ERISA Affiliate Plan pursuant to Section
401(a)(29) or Section 412(n) of the Code or pursuant to ERISA.
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(6) To Citizens' knowledge, under each Pension Plan, as of the
last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all
"benefit liabilities" attributable to the participation
therein of Citizens and its Subsidiaries did not exceed the
then current value of the assets of such plan attributable to
the participation therein of Citizens and its Subsidiaries.
For this purpose, "benefit liabilities" shall be determined in
accordance with Section 4001(a)(16) of ERISA on the basis of
the actuarial assumptions contained in the Plan's most recent
actuarial valuation.
(7) No Compensation Plan provides benefits, including death or
medical benefits, with respect to any employees or former
employees of Citizens or any of its Subsidiaries (or their
spouses, beneficiaries, or dependents) beyond the retirement
or other termination of service of any such employee other
than (A) coverage mandated by Part 6 of Title I of ERISA or
Section 4980B of the Code, (B) retirement or death benefits
under any Pension Plan, (C) disability benefits under any
Compensation Plan which is an employee welfare benefit plan
(as defined under Section 3(1) of ERISA) that have been fully
provided for by insurance or otherwise, or (D) benefits in the
nature of severance pay under any Compensation Plan. Citizens
and its Subsidiaries may amend or terminate any Compensation
Plan which provides post-retirement or termination of
employment benefits at any time without incurring any
liability thereunder. There has been no communication to
employees, former employees or their spouses, beneficiaries or
dependents by Citizens or any of its Subsidiaries that
promised or guaranteed such employees retiree health or life
insurance or other retiree death benefits on a permanent basis
or promised or guaranteed that any such benefits could not be
modified, eliminated or terminated.
(8) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby
including, without limitation, as a result of any termination
of employment prior to, at or following the Effective Time,
will (A) result in any increase in compensation or any payment
(including, without limitation, severance, golden parachute or
otherwise) becoming due to any current or former director,
officer or employee of Citizens or any of its Subsidiaries
under any Compensation Plan or otherwise from Citizens or any
of its Subsidiaries, (B) increase any benefits otherwise
payable under any Compensation Plan, or (C) result in any
acceleration of the time of payment, funding or vesting of any
such benefit.
(9) Neither Citizens nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments
under which are not or would not reasonably be expected to be
deductible as a result of the limitations under Section 162(m)
of the Code and the regulations issued thereunder. None of
Citizens, the Surviving Corporation or any of their respective
Subsidiaries will be obligated to make a payment as a result,
directly or indirectly, of the transactions contemplated by
this Agreement that would not reasonably be expected to be
deductible as a result
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of the limitations under Section 162(m) of the Code and the
regulations issued thereunder.
(10) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation,
as a result of any termination of employment prior to, at or
following the Effective Time), none of Lincoln, Citizens the
Surviving Corporation, or any of their respective Subsidiaries
will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an
individual who is a "disqualified individual" (as such terms
are defined in Section 280G of the Code), without regard to
whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
(m) Labor Matters. Neither Citizens nor any of its Subsidiaries is a
party to or is bound by any collective bargaining Contract or
understanding with a labor union or labor organization, nor is Citizens
or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to
compel Citizens or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Citizens' knowledge, threatened, nor is Citizens aware
of any activity involving it or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(n) Environmental Matters. (1) To Citizens' knowledge, Citizens and
each of its Subsidiaries has complied in all material respects at all
times with applicable Environmental Laws; (2) to Citizens' knowledge,
no property (including buildings and any other structures) currently or
formerly owned or operated by Citizens or any of its Subsidiaries has
been contaminated with, or has had any release of, any Hazardous
Substance except as Previously Disclosed; (3) to Citizens' knowledge,
neither Citizens nor any of its Subsidiaries would reasonably be
expected to be ruled to be the owner or operator under any
Environmental Law of any property in which it has currently or formerly
held a Lien; (4) to Citizens' knowledge, neither Citizens nor any of
its Subsidiaries is subject to liability for any Hazardous Substance
disposal or contamination on any other third-party property; (5)
neither Citizens nor any of its Subsidiaries has received any notice,
demand letter, claim or request for information alleging any violation
of, or liability under, any Environmental Law; (6) neither Citizens nor
any of its Subsidiaries is subject to any order, decree, injunction or
other agreement with any Governmental Authority or any third party
relating to any Environmental Law; (7) to Citizens' knowledge, there
are no circumstances or conditions involving Citizens or any of its
Subsidiaries or any currently or formerly owned or operated property
(including the presence of asbestos, underground storage tanks, lead
products, polychlorinated biphenyls or gas station sites) that could
result in any claims, liability or investigations or result in any
restrictions on the ownership, use, or transfer of any property
pursuant to any Environmental Law; and (8) Citizens has delivered to
Lincoln copies of all environmental reports, studies,
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sampling data, correspondence, filings and other environmental
information in its possession or reasonably available to it relating to
Citizens, any of its Subsidiaries, any currently or formerly owned or
operated property or any property in which Citizens or any of its
Subsidiaries has held a Lien.
(o) Tax Matters. (1) All returns, declarations, reports, estimates,
information returns and statements required to be filed on or before
the Effective Date under federal, state, local or any foreign tax laws
("Tax Returns") with respect to Citizens or any of its Subsidiaries,
have been or will be timely filed, or requests for extensions have been
timely filed and have not expired; (2) all Tax Returns filed by
Citizens and its Subsidiaries are complete and accurate in all material
respects; (3) all Taxes shown to be due and payable (without regard to
whether such Taxes have been assessed) on such Tax Returns (or, with
respect to Tax Returns for which an extension has been timely filed,
will be required to be shown as due and payable when such Tax Returns
are filed) have been paid or adequate reserves have been established
for the payment of such Taxes; (4) no audit or examination or refund
litigation with respect to any such Tax Return is pending or, to
Citizens' knowledge, has been threatened; (5) all deficiencies asserted
or assessments made as a result of any examination of a Tax Return of
Citizens or any of its Subsidiaries have been paid in full; (6) no
waivers of statutes of limitation have been given by or requested with
respect to any Taxes of Citizens or its Subsidiaries; (7) Citizens and
its Subsidiaries have never been a member of an affiliated, combined,
consolidated or unitary Tax group for purposes of filing any Tax Return
(other than a consolidated group of which Citizens was the common
parent); (8) no closing agreements, private letter rulings, technical
advice memoranda or similar agreement or rulings have been entered into
or issued by any taxing authority with respect to Citizens or any of
its Subsidiaries; (9) no tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfer contemplated by
this Agreement; (10) Citizens and its Subsidiaries are not bound by any
tax indemnity, tax sharing or tax allocation agreement or arrangement;
and (11) Citizens and its Subsidiaries have withheld and paid all Taxes
that they are required to withhold from compensation income of their
employees.
(p) Risk Management. All swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management
arrangements, whether entered into for Citizens' own account, or for
the account of one or more of Citizens' Subsidiaries or their
customers, were entered into (1) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and (2) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and
legally binding obligation of Citizens or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and are in full force and effect. Neither Citizens
nor its Subsidiaries, nor to Citizens' knowledge any other party
thereto, is in breach of any of its material obligations under any such
agreement or arrangement.
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(q) Books and Records. The books and records of Citizens and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein, and they
fairly present the financial position of Citizens and its Subsidiaries.
(r) Insurance. Citizens' Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Citizens or its
Subsidiaries ("Insurance Policies"). Citizens and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts
as is prudent in accordance with industry practices. All of the
Insurance Policies are in full force and effect; Citizens and its
Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(s) No Brokers. No action has been taken by Citizens that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid
by Citizens to Trident in an amount and on terms Previously Disclosed.
(t) Disclosure. The information Previously Disclosed or otherwise
provided to Lincoln in connection with this Agreement does not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in
the light of the circumstances in which they are being made, not
misleading. The copies of all documents furnished to Lincoln hereunder
are true and complete.
5.04 Representations and Warranties of Lincoln. Except as Previously Disclosed
in a paragraph of its Disclosure Schedule corresponding to the relevant
paragraph below, Lincoln hereby represents and warrants to Citizens as follows:
(a) Organization, Standing and Authority. Lincoln is duly organized,
validly existing and in good standing under the laws of the State of
Indiana, and is duly qualified to do business and is in good standing
in the jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.
(b) Lincoln Stock.
(1) As of the date hereof, the authorized capital stock of
Lincoln consists solely of 20,000,000 shares of Lincoln Common
Stock, of which 5,892,725 shares are outstanding, and
2,000,000 shares of Lincoln Preferred Stock, of which no
shares are outstanding as of the date hereof. As of the date
hereof, except as Previously Disclosed, there are no shares of
Lincoln Common Stock authorized and reserved for issuance,
Lincoln does not have any Rights issued or outstanding with
respect to Lincoln Common Stock, and Lincoln does not have any
commitment to authorize, issue or sell any Lincoln Common
Stock or Rights, except pursuant to this
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Agreement. The number of shares of Lincoln Common Stock which
are issuable and reserved for issuance upon exercise of
Lincoln Stock Options as of the date hereof and the exercise
price of such Lincoln Stock Options are Previously Disclosed.
(2) The shares of Lincoln Common Stock to be issued as
Consideration, when issued in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
(c) Subsidiaries. Each of Lincoln's Subsidiaries has been duly
organized and is validly existing and in good standing under the laws
of the jurisdiction of its organization, and is duly qualified to do
business and in good standing in the jurisdictions where its ownership
or leasing of property or the conduct of its business requires it to be
so qualified.
(d) Corporate Power. Lincoln and each of its Subsidiaries has the
requisite power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; Lincoln has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby; and Lincoln Savings Bank has the requisite power
and authority to execute, deliver and perform its obligations as set
forth in the form of Subsidiary Merger Agreement attached hereto as
Exhibit C and to consummate the transactions contemplated thereby.
(e) Corporate Authority and Action.
(1) Lincoln has the requisite corporate power and authority,
and has taken all corporate action necessary, in order (A) to
authorize the execution and delivery of, and performance of
its obligations under, this Agreement, and (B) subject only to
the registration and issuance of the Lincoln Common Stock to
be provided as part of the Consideration, to consummate the
Merger. This Agreement and the Ancillary Documents to which
Lincoln is a party each constitute and/or will constitute the
valid and legally binding obligation of Lincoln, enforceable
in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization
and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
(2) Lincoln has received the opinion of KBW, dated the date of
this Agreement, to the effect that, as of the date of this
Agreement, the Consideration to be received in the Merger by
the shareholders of Lincoln is fair to the shareholders of
Lincoln from a financial view point.
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(f) Regulatory Approvals; No Defaults.
(1) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are
required to be made or obtained by Lincoln or any of its
Subsidiaries in connection with the execution, delivery or
performance by Lincoln of this Agreement, or to consummate the
Merger and the other transactions contemplated hereby, except
for (A) the filing with, and declaration of effectiveness by,
the SEC of the Registration Statement, (B) the filing of
applications with and receipt of approval thereof from the
OTS, with respect to the Merger and the Subsidiary Merger, (C)
the filing of articles of merger with the Secretary of State
of the State of Indiana pursuant to the IBCL and the filing of
articles of combination with the OTS with respect to the
Subsidiary Merger, (D) the filing of a notice with the NASDAQ
with respect to the listing for trading of the shares of
Lincoln Common Stock to be issued in the Merger on the
National Market System, and (E) such other filings, approvals,
consents or waivers as are required under applicable law in
connection with the transactions contemplated by this
Agreement. As of the date hereof, Lincoln is not aware of any
reason why the approvals of all Governmental Authorities
necessary to permit consummation of the transactions
contemplated by this Agreement will not be received without
the imposition of a condition or requirement described in
Section 7.01(b).
(2) Subject to receipt of the regulatory approvals and
expiration of the waiting periods referred to in the preceding
paragraph and the making of required filings under federal and
state securities laws, the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to
any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
Contract of Lincoln or of any of its Subsidiaries or to which
Lincoln or any of its Subsidiaries or properties is subject or
bound, (B) constitute a breach or violation of, or a default
under, the Lincoln Articles or the Lincoln By-laws, or (C)
require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or
license or Contract.
(g) SEC Documents; Financial Statements.
(1) Lincoln's Annual Reports on Form 10-K and proxy statements
on Form 14-A for the fiscal years ended December 31, 1998
and1999, quarterly reports on Form 10- Q filed during the
fiscal year ended December 31, 1999, and all other reports,
registration statements, definitive proxy statements or
information statements filed or to be filed by Lincoln or any
of its Subsidiaries subsequent to December 31, 1999 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, in the form filed or to be filed
(collectively, the "Lincoln's SEC Documents")
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with the SEC, as of the date filed, (A) complied or will
comply with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of
this Agreement, then as of the date of such filing) and will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
each of the balance sheets contained in or incorporated by
reference into any such Lincoln SEC Document (including the
related notes and schedules thereto) fairly presents, or will
fairly present, the financial position of Lincoln and its
Subsidiaries as of its date, and each of the statements of
income and changes in shareholders' equity and cash flows or
equivalent statements in such of Lincoln's SEC Documents
(including any related notes and schedules thereto) fairly
presents, or will fairly present, the results of operations,
changes in shareholders' equity and changes in cash flows, as
the case may be, of Lincoln and its Subsidiaries for the
periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in
the case of unaudited statements.
(2) Since December 31, 1999 on a consolidated basis Lincoln
and its Subsidiaries have not incurred any liability other
than in the ordinary course of business consistent with past
practice.
(3) Since December 31, 1999 (A) Lincoln and its Subsidiaries
have conducted their respective businesses in the ordinary and
usual course consistent with past practice and (B) no event
has occurred or circumstance arisen that, individually or
taken together with all other facts, events and circumstances
(described in any paragraph of Section 5.04 or otherwise), has
had or is reasonably likely to have a Material Adverse Effect
with respect to Lincoln.
(h) Litigation. Except as disclosed in Lincoln's SEC Documents filed
before the date hereof, no litigation, claim or other proceeding before
any court, arbitrator or Governmental Authority is pending against
Lincoln or any of its Subsidiaries and, to Lincoln's knowledge, no such
litigation, claim or other proceeding has been threatened.
(i) Compliance with Laws. Lincoln and each of its Subsidiaries:
(1) conducts its business in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act and all other
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applicable fair lending laws and other laws relating to
discriminatory business practices;
(2) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are
required in order to permit them to conduct their businesses
substantially as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are
in full force and effect and, to the best of its knowledge, no
suspension or cancellation of any of them is threatened;
(3) has received, since December 31, 1997 no notification or
communication from any Governmental Authority (A) asserting
that Lincoln or any of its Subsidiaries is not in compliance
with any of the statutes, regulations or ordinances that such
Governmental Authority enforces; (B) threatening to revoke any
license, franchise, permit or governmental authorization (nor,
to Lincoln's knowledge, do any grounds for any of the
foregoing exist) or (C) restricting or disqualifying their
activities (except for restrictions generally imposed by rule,
regulation or administrative policy on banking organizations
generally); and
(4) is not subject to any order or decree issued by, or a
party to any agreement or memorandum of understanding with, or
a party to any commitment letter or similar undertaking to, or
subject to any order or directive by, a recipient of any
supervisory letter from or has adopted any board resolutions
at the request of any Governmental Authority, or been advised
by any Governmental Authority that it is considering issuing
or requesting any such agreement or other action or have
knowledge of any pending or threatened regulatory
investigation.
(j) No Brokers. No action has been taken by Lincoln that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid
by Lincoln to KBW.
(k) Disclosure. The information Previously Disclosed or otherwise
provided to Citizens in connection with this Agreement does not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in
the light of the circumstances in which they are being made, not
misleading. The copies of all documents furnished to Citizens hereunder
are true and complete.
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Article VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Citizens and Lincoln agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02 Shareholder Approval.
(a) Citizens agrees to take, in accordance with applicable law,
applicable rules of NASDAQ, and its articles of incorporation and
by-laws, all action necessary to convene an appropriate meeting of its
shareholders to consider and vote upon the approval and adoption of
this Agreement and the consummation of the actions and transactions
contemplated hereby, and to solicit shareholder approval and adoption,
as promptly as practicable after the Registration Statement is declared
effective. The Citizens Board is recommending and, unless the board of
directors, after having consulted with and considered the advice of
outside counsel and Trident, has determined in good faith that to do so
would result in a failure by the directors to discharge properly their
fiduciary duties in accordance with Indiana law, the Citizens Board
will continue to recommend to the shareholders of Citizens, that it
approves this Agreement and take any other action required to permit
consummation of the transactions contemplated hereby.
(b) Each of Citizens and Lincoln agree to take all action necessary in
their respective capacities as sole shareholder of Citizens Savings
Bank and Lincoln Savings Bank to approve and adopt the Merger Agreement
for Subsidiary Merger and the transactions contemplated thereby.
6.03 Registration Statement.
(a) Lincoln agrees to prepare a registration statement on Form S-4 (the
"Registration Statement"), to be filed by Lincoln with the SEC in
connection with the issuance of Lincoln Common Stock in the Merger
(including the proxy statement and prospectus and other proxy
solicitation materials of Citizens constituting a part thereof (the
"Proxy Statement") and all related documents). Citizens agrees to
cooperate, and to cause its Subsidiaries to cooperate, with Lincoln,
its counsel and its accountants, in preparation of the Registration
Statement and the Proxy Statement; and, provided that Citizens and its
Subsidiaries have cooperated as required above, Lincoln agrees to file
the Registration Statement with the SEC as promptly as reasonably
practicable after the date hereof. Each of Citizens and Lincoln agrees
to use its reasonable best efforts to cause the Registration Statement
to be declared effective
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under the Securities Act as promptly as reasonably practicable after
filing thereof. Lincoln also agrees to use all reasonable best efforts
to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this
Agreement. Citizens agrees to furnish to Lincoln all information
concerning Citizens, its Subsidiaries, officers, directors and
shareholders as may be reasonably requested in connection with the
foregoing.
(b) Each of Citizens and Lincoln agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied
by it for inclusion or incorporation by reference in (1) the
Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under
the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (2) the
Proxy Statements and any amendment or supplement thereto will, at the
date of mailing to shareholders and at the time of the shareholders
meetings for the respective corporations, contain any untrue statement
which, at the time and in the light of the circumstances under which
such statement is made, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to
correct any statement in any earlier statement in the Proxy Statement
or any amendment or supplement thereto. Each of Citizens and Lincoln
further agrees that if it shall become aware prior to the Effective
Date of any information furnished by it that would cause any of the
statements in the Proxy Statement to be false or misleading with
respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps
to correct the Proxy Statements.
(c) Lincoln agrees to advise Citizens, promptly after Lincoln receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of
Lincoln Common Stock for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
6.04 Press Releases. Each of Citizens and Lincoln agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby (except for any release or statement that, in the written
opinion of outside counsel to Citizens, is required by law or regulation and as
to which Citizens has used its best efforts to discuss with Lincoln in advance,
provided that such release or statement has not been caused by, or is not the
result of, a previous disclosure by or at the direction of Citizens or any of
its representatives that was not permitted by this Agreement).
6.05 Access; Information.
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(a) Each of Citizens and Lincoln agrees that upon reasonable notice and
subject to applicable laws relating to the exchange of information, it
shall afford the other party and the other party's officers, employees,
counsel, accountants and other authorized representatives, such access
during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation,
tax returns and work papers of independent auditors), properties,
personnel and to such other information as any party may reasonably
request and, during such period, it shall furnish promptly to such
other party (1) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state
securities or banking laws, and (2) all other information concerning
the business, properties and personnel of it as the other may
reasonably request.
(b) Each of Citizens and Lincoln agrees that it will not, and will
cause its representatives not to, use any information obtained pursuant
to this Section 6.05 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 unless such information (1) was
already known to such party, (2) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (3) is disclosed with the prior written approval of the
party to which such information pertains or (4) is or becomes readily
ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents or extracts thereof containing
information and data as to another party hereto to be returned to the
party which furnished the same.
(c) No investigation by either party of the business and affairs of the
other shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or the conditions to
either party's obligation to consummate the transactions contemplated
by this Agreement.
6.06 Acquisition Proposals. Citizens agrees that it shall not, and shall cause
its Subsidiaries and its and its Subsidiaries' officers, directors, agents,
advisors and affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any tender or exchange offer, proposal for a merger, consolidation or other
business combination involving Citizens or any of its Subsidiaries or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets or deposits of, Citizens or any of its
Subsidiaries, other than the transactions contemplated by this Agreement (any of
the foregoing, an "Acquisition Proposal"); provided however, that if Citizens is
not otherwise in violation of this Section 6.06, the Citizens Board may provide
information to, and may engage in such negotiations or discussions with, a
person with respect to an Acquisition Proposal, directly or through
representatives, if the Citizens Board, after consultation with its outside
counsel and Trident, determines in good faith that its failure to engage in any
such negotiations or discussions would
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constitute a failure to discharge properly the fiduciary duties of such
directors in accordance with Indiana law. Citizens shall promptly (within 24
hours) advise Lincoln following the receipt by it of any Acquisition Proposal
and the substance thereof (including the identity of the person making such
Acquisition Proposal and a copy of such Acquisition Proposal), and advise
Lincoln of any developments with respect to such Acquisition Proposal
immediately upon the occurrence thereof.
6.07 Affiliate Agreements. Not later than the 15th day prior to the mailing of
the Proxy Statements, Citizens shall deliver to Lincoln a schedule of each
person that, to Citizens' knowledge, is or is reasonably likely to be, as of the
date of Citizens shareholders' meeting, deemed to be an "affiliate" of it (each,
a "Citizens Affiliate") as that term is used in Rule 145 under the Securities
Act. Citizens agrees to use its reasonable best efforts to cause each person who
may be deemed to be a Citizens Affiliate to execute and deliver to Citizens and
Lincoln on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as Exhibit D.
6.08 NASDAQ Listing. Lincoln agrees to use its reasonable best efforts to list,
prior to the Effective Date, on the National Market System of NASDAQ, subject to
official notice of issuance, the shares of Lincoln Common Stock to be issued to
the holders of Citizens Common Stock in the Merger.
6.09 Regulatory Applications.
(a) Lincoln and Citizens and their respective Subsidiaries shall
cooperate and use their respective reasonable best efforts to prepare
all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement. Each of Lincoln and Citizens agrees
that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other party appraised of
the status of material matters relating to completion of the
transactions contemplated hereby. Copies of applications and
correspondence with such Governmental Authorities promptly shall be
provided to the other party.
(b) Each of Lincoln and Citizens agrees, upon request, to furnish the
other party with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with any filing, notice
or application made by or on behalf of such other party or any of its
Subsidiaries to any third party or Governmental Authority.
6.10 D & O Insurance.
(a) For a period of two years from the Effective Time, Lincoln shall
use its reasonable best efforts to obtain an endorsement to its
director's and officer's liability insurance policy
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to cover the present and former officers and directors of Citizens or
any of its Subsidiaries (determined as of the Effective Time) with
respect to claims against such directors and officers arising from
facts or events which occurred before the Effective Time, which
insurance shall contain at least the same coverage and amounts, and
contain terms and conditions no less advantageous, as that coverage
currently provided by Citizens; provided however, that if Lincoln is
unable to obtain such endorsement, then Citizens may purchase tail
coverage under its existing director and officer liability insurance
policy for such claims; provided further that in no event shall Lincoln
be required to expend each year during such two-year period more than
twice the current annual amount spent by Citizens (the "Insurance
Amount") to maintain or procure its current directors' and officers'
insurance coverage; provided further, that if Lincoln is unable to
maintain or obtain the insurance called for by this Section 6.10(a),
Lincoln shall use its reasonable best efforts to obtain as much
comparable insurance as is available for the Insurance Amount;
provided, further, that officers and directors of Citizens or any
Subsidiary may be required to make application and provide customary
representations and warranties to Lincoln's insurance carrier for the
purpose of obtaining such insurance.
(b) For six years after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless the present and former
officers and directors of Citizens and its Subsidiaries against all
losses, expenses (including attorneys' fees), claims, damages or
liabilities arising out of actions or omissions occurring on or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the full extent then permitted under
the IBCL and by Lincoln's Articles of Incorporation as in effect on the
date hereof, including provisions relating to advances of expenses
incurred in the defense of any action or suit.
(c) If Lincoln shall consolidate with or merge into any other entity
and shall not be the continuing or surviving entity of such
consolidation or merger or shall transfer all or substantially all of
its assets to any entity (a "Change of Control"), then and in each
case, proper provision shall be made so that the successors and assigns
of Lincoln shall assume the obligations set forth in this Section 6.10
and in Sections 2.01(d), 6.13 and 6.20 below.
6.11 Accountants' Letters. Each of Citizens and Lincoln shall use its reasonable
best efforts to cause to be delivered to the other party, and such other party's
directors and officers who sign the Registration Statement, letters of Olive
LLP, independent auditors, dated (1) the date on which the Registration
Statement shall become effective and (2) a date shortly prior to the Effective
Date, and addressed to such other party, and such directors and officers, in
form and substance customary for "comfort" letters delivered by independent
accountants in accordance with Statement of Accounting Standards No. 72.
6.12 Notification of Certain Matters. Each of Citizens and Lincoln shall give
prompt notice to the other of any fact, event or circumstance known to it that
(1) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse
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Effect with respect to it or (2) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained
herein.
6.13 Advisory Directors. As of the Effective Time, Lincoln agrees to cause
Lincoln Savings Bank to appoint each person, other than Fred W. Carter, who
immediately prior to the Effective Time was a director or director emeritus of
Citizens or Citizens Savings Bank, as an advisory director of Lincoln Savings
Bank. Such advisory directors and advisory directors emeritus shall meet semi-
annually and shall advise Lincoln on facilitating a smooth transition of
Citizens' business into Lincoln's following the Merger. Subject to applicable
regulatory requirements, unless Cause exists for their removal, they shall be
re-appointed annually to serve in such capacities through March 31, 2003 and
shall receive annual fees of $1,000 for such service. For purposes of this
Section 6.13, "Cause" means a conviction of a felony or any crime involving an
element of moral turpitude.
6.14 Stock Option Plan. Within 45 days of the date as of which this Agreement is
dated, Citizens will obtain written consents from each holder to whom a Citizens
Stock Option is outstanding (i) consenting to the disposition of such option in
accordance with the provisions of Section 3.01(b) or 3.01(c) above, (ii)
agreeing not to exercise such option on or before the Effective Date unless (A)
this Agreement is terminated and the Merger is abandoned pursuant to Article
VIII or (B) such exercise is made not more than one week before the date on
which the option otherwise would cease to be exercisable.
6.15 Recognition and Retention Plan. At the Effective Time, Lincoln Savings Bank
will assume the Citizens Savings Bank Recognition and Retention Plan and Trust
(the "RRP Plan"). Prior to the Effective Time, Citizens Savings Bank will take
the necessary steps to (i) cause any shares of Citizens Common Stock held in the
Plan Share Reserve of the RRP Plan to be returned to Citizens and canceled and
(ii) amend the RRP Plan, effective as of the Effective Time, (A) to define
"Bank" to refer to Lincoln Savings Bank instead of to Citizens Savings Bank, (B)
to define "Holding Company" to refer to Lincoln instead of to Citizens, (C) to
define "Committee" to refer to the Compensation Committee of the Lincoln Board
instead of to the Stock Compensation Committee of the Citizens Board, (D) to
define "Common Stock" to refer to Lincoln Common Stock instead of to Citizens
Common Stock, (E) to delete Sections 3.07, 5.01 and 5.02, (F) to provide in
Section 5.03 that no further contributions may be made to the Trust, that shares
of Lincoln Common Stock received as Per Share Stock Consideration for Citizens
Common Stock shall be retained and held subject to the same Award to which such
Citizens Common Stock was subject, and that cash received as Per Share Cash
Consideration for Citizens Common Stock shall be applied to the purchase of
shares of Lincoln Common Stock on the open market, which shares shall be
retained and held subject to the same Award to which such Citizens Common Stock
was subject, (G) to provide in Section 7.01 that service as an advisory director
of Lincoln Savings Bank provided for in Section 6.13 above, service as a
director or director emeritus of Lincoln Savings Bank, and service as a director
of Lincoln shall each constitute "service as a Director or Director Emeritus"
for purposes of determining the extent to which Plan Share Awards are earned,
and (H) to provide in Section 9.02 that the power to amend or terminate shall
not include the right to cancel outstanding Plan Share Awards or to require
shares of Lincoln Common Stock or other assets subject to any outstanding
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Award to be released from the trust under the RRP Plan while the Award remains
outstanding. In addition, prior to the Effective Time, Citizens Savings Bank may
modify any or all outstanding RRP Plan Awards held by employees of Citizens and
its Subsidiaries who became employees of Lincoln or its Subsidiaries on the
Effective Date to provide that the Award shall become fully vested, subject to
any applicable bank regulatory requirements, in the event the grantee's
qualifying service with Lincoln and its Subsidiaries (or their successors) is
terminated by Lincoln and its Subsidiaries (or their successors) without cause
or by the grantee for good reason. The trustee of the trust under the RRP Plan
shall not be obligated to purchase shares of Lincoln Common Stock on the open
market as provided in (F) above at any time Lincoln is engaged in an open market
stock repurchase program. For purposes of this Section 6.15 only, to the extent
the capitalized terms in this Section 6.15 are defined and capitalized in the
governing documents and outstanding grant agreements of the RRP Plan as in
effect on the date hereof and are not otherwise specially defined or dealt with
in this Agreement, such capitalized terms shall have the meanings assigned to
them in such governing documents and outstanding agreements.
6.16 ESOP. As of the Effective Date, the Citizens Employee Stock Ownership Plan
(the "Citizens ESOP") shall be terminated, all shares of Citizens Common Stock
held by the Citizens ESOP shall be converted into rights to receive the Merger
Consideration in respect thereof, all outstanding indebtedness of the Citizens
ESOP shall be repaid, any assets remaining in the suspense fund under the
Citizens ESOP shall be allocated to Participants' Company Contribution Accounts
under the Citizens ESOP either pursuant to Sections 4.2 and 8.7(h) of the
Citizens ESOP in the case of amounts attributable to Company Contributions made
prior to the Effective Date for the Plan Year which includes the Effective Date
or pursuant to Section 8.7(j) of the Citizens ESOP in the case of any other
amounts, and the net assets of the Citizens ESOP shall be distributed to
Participants under the Citizens ESOP and their Beneficiaries, subject to the
receipt of a favorable determination letter from the IRS and except as otherwise
required by applicable law. Citizens shall file the notifications or
applications with the IRS necessary to comply with the provisions of this
Section 6.16. If for any reason the IRS will not permit the Citizens ESOP to be
terminated or distributions be made to employees of Citizens and its
Subsidiaries as provided above unless the Citizens ESOP is amended, Citizens may
make such required amendment; provided, however, that (i) no such amendment
shall require or have the effect of requiring Lincoln or its Subsidiaries to
make any contributions to the Citizens ESOP at or after the Effective Time, (ii)
no such amendment shall require or have the effect of requiring Citizens or its
Subsidiaries to make any contributions to the Citizens ESOP at or prior to the
Effective Time in addition to any contributions that otherwise would be
required, (iii) any such amendment shall be conditioned upon its not having an
adverse effect upon the qualified status of the Citizens ESOP under Section
401(a) of the Code, and (iv) no such amendment shall require or have the effect
of requiring the continuation of the Citizens ESOP after the Effective Date
except to the extent and for so long as the Citizens ESOP may be so continued
without having an adverse effect on the qualified status under Section 401(a) of
the Code of any other employee pension benefit plan of Lincoln or a Subsidiary
of Lincoln that is intended to be so qualified. Citizens and its Subsidiaries
shall make no contributions to the Citizens ESOP between the date hereof and the
Effective Date other than such as may be required to maintain the tax-qualified
status of the Citizens
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ESOP or to enable the Citizens ESOP to make required payments on the loans
currently outstanding to it.
6.17 Defined Benefit Pension Plan. Citizens Savings Bank and Lincoln Savings
Bank both maintain qualified defined benefit pension programs through
participation in the Financial Institutions Retirement Fund ("FIRF"). Citizens
Savings Bank shall make contributions to the Citizens Savings Bank FIRF between
the date hereof and the Effective Date only to the extent required to maintain
the Plan's tax-qualified status and avoid any federal income taxes or penalties
attributable to the Plan's funding status. At or prior to the Effective Time,
Citizens Savings Bank may amend its FIRF Plan to take into account, for purposes
of determining a participant's rate of base compensation for the calendar year
2000 and subsequent calendar years, increases in such rate occurring during the
applicable year. At the Effective Time, subject to applicable law and the
requirements of the FIRF Plan, Lincoln Savings Bank shall assume the FIRF Plan
of Citizens Savings Bank, merge such Plan into its own FIRF Plan, and amend as
necessary the participation agreement of such merged FIRF Plan so that, (i) from
and after the Effective Time, employees of Citizens Savings Bank who become
employees of Lincoln Savings Bank will accrue benefits pursuant to the FIRF Plan
as adopted by Lincoln Savings Bank resulting from the merger of the Citizens
Savings Bank FIRF Plan with the Lincoln Savings Bank FIRF Plan, and (ii) from
and afer the merger of those Plans, former Citizens employees participating in
the merged Plan shall receive credit for eligibility, vesting, and benefit
accrual purposes, for the service of such employees with Citizens and its
Subsidiaries prior to the Effective Time as if such service were with Lincoln
and its Subsidiaries; provided, however, that the accrued benefit of any such
former Citizens employee in respect of service prior to the Effective Time shall
be determined under the benefit formulae under the Citizens Savings Bank FIRF
Plan as in effect from time to time prior to the Effective Time; provided
further, that for benefit accrual purposes, service prior to the Effective Time
that was not taken into account for such purposes under the Citizens Savings
Bank FIRF Plan shall not be taken into account under the Lincoln Savings Bank
FIRF Plan. Nothing herein shall be deemed to preclude Lincoln and its
Subsidiaries from amending or terminating the Lincoln Savings Bank FIRF Plan
after the Effective Time.
6.18 Executive Supplemental Retirement Income Agreements. From and after the
Effective Date, Lincoln Savings Bank will assume the rights and obligations of
Citizens Savings Bank under its executive supplemental retirement income
agreements with Fred W. Carter, Stephen D. Davis and Cindy S. Chambers and
director deferred compensation agreement with Fred W. Carter, all as in effect
on the date hereof and amended as herein provided. Prior to the Effective Date,
Citizens Savings Bank may amend such agreements (i) to provide that they cannot
be amended at or after the Effective Time without the consent of the affected
employee (or former employee) or director (or former director) or his or her
successor or beneficiary and (ii) to provide, in the event of a Change of
Control of Lincoln, for the immediate payment to the affected employee (or
former employee) or director (or former director), or his or her successor or
beneficiary, in one lump sum, of the entire remaining nonforfeitable accrued
benefit thereunder, such payment to be in an amount equal to the actuarial
equivalent of such remaining benefit as the same then would be determined under
the FIRF Plan.
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6.19 Employee Matters.
(a) Lincoln agrees that those employees of Citizens or its Subsidiaries
who become employees of Lincoln or its Subsidiaries on the Effective
Date ("Former Citizens Employees"), while they remain employees of
Lincoln or its Subsidiaries after the Effective Date will be provided
with benefits under employee benefit plans during their period of
employment which are no less favorable in the aggregate than those
provided by Lincoln to similarly situated employees of Lincoln and its
Subsidiaries. At the Effective Time, except as otherwise provided in
Section 6.17 above, Lincoln will amend or cause to be amended each
employee benefit plan of Lincoln and its Subsidiaries in which Former
Citizens Employees are eligible to participate, to the extent
necessary, so that as of the Effective Time (i) such plans take into
account for purposes of eligibility, vesting, and benefit accrual, the
service of such employees with Citizens and its Subsidiaries as if such
service were with Lincoln and its Subsidiaries, to the same extent that
such service was credited under a comparable plan of Citizens and its
Subsidiaries, (ii) Former Citizens Employees are not subject to any
waiting periods or pre-existing condition limitations under the
medical, dental and health plans of Lincoln or its Subsidiaries in
which they are eligible to participate and may commence participation
in such plans on the Effective Date, (iii) Former Citizens Employees
will retain credit for unused sick leave and vacation pay which has
been accrued as of the Effective Time, (iv) for purposes of determining
the entitlement of Former Citizens Employees to sick leave and vacation
pay following the Effective Time, the service of such employees with
Citizens and its Subsidiaries shall be treated as if such service were
with Lincoln and its Subsidiaries, and (v) Former Citizens Employees
shall become eligible to participate in the Lincoln Federal Savings
Bank 401(k) plan on the first plan entry date following their
satisfaction of the eligibility requirements of such plan.
Notwithstanding the foregoing, Lincoln is not required to cover until
January 1, 2002, under its own employee stock ownership plan those
former employees of Citizens and its Subsidiaries who participated in
the Citizens ESOP.
(b) Citizens and its Subsidiaries will comply with applicable law and
the terms of the relevant Compensation Plan with respect to the voting
of any Citizens Common Stock held by any such plan.
(c) Fred W. Carter is retiring and will cease to be an employee of
Citizens or Citizens Savings Bank or their respective successors as of
the Effective Time. Prior to the Effective Time, Mr. Carter will
continue to be paid the compensation provided for in his employment
agreement with Citizens Savings Bank and will continue participating in
the employee benefit, retirement, and compensation plans and other
perquisites provided for in such agreement. Any benefits payable under
insurance, health, retirement and bonus plans through the Effective
Date will be paid when due under those plans. Citizens shall pay to Mr.
Carter (or his estate in the event of his death prior to the Effective
Time) a cash sum (the "Cash Sum") equal to the sum of (i) $412,000,
less (ii) any excess of his base compensation
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from Citizens and its Subsidiaries for the portion of calendar year
2000 preceding the Effective Time over the amount of base compensation
to which he would have been entitled for such period had his base
compensation been payable ratably during such calendar year at the
annual rate of $155,000. Of this amount $150,000 shall be paid to Mr.
Carter on January 2, 2001, and the balance shall be paid to him at the
Effective Time; provided, however, that all of such amount shall be
paid to Mr. Carter at the Effective Time if it shall be determined by
Olive LLP (or another independent accounting firm mutually agreeable to
Lincoln and Mr. Carter) that this is necessary in order for such amount
to be accrued as an expense of Citizens and it Subsidiaries for the
accounting period which includes the Effective Date. Citizens Savings
Bank will use its best efforts to obtain from Mr. Carter, within 30
days after the date as of which this Agreement is dated, (i) an
acknowledgment that his employment is terminating otherwise than
pursuant to subsections 7(A), 7(B), 7(C), 7(D) or 7(E) of his
employment agreement and (ii) a binding written commitment, in the
event the Merger is consummated, to accept the amounts payable under
this Section 6.19(c) in lieu of any amounts that otherwise would be
payable under section 8 of his employment agreement. The amounts
payable under this Section 6.19(c) shall be paid whether or not Mr.
Carter is required to terminate his employment with Citizens Savings
Bank prior to the Effective Date for any reason, including, without
limitation, his disability.
(d) Lincoln Savings Bank wants to retain the services of Fred W. Carter
as a consultant pursuant to the terms of the Consulting Agreement
attached hereto as Exhibit E. Lincoln Savings Bank will use its best
efforts to negotiate and enter into with Mr. Carter, within 45 days
from the date as of which this Agreement is dated, an agreement
retaining Mr. Carter as a consultant, to become effective as of the
Effective Time, either on the terms set forth in Exhibit E or on such
alternative terms as Mr. Carter and Lincoln Savings Bank mutually may
agree.
(e) With the exception of Fred W. Carter, Lincoln intends to retain
Citizens employees for at least six months following the Effective Date
in positions comparable to those they currently hold with Citizens or
its Subsidiaries.
6.20 Severance. With the exception of Fred W. Carter, those employees of
Citizens or its Subsidiaries as of the Effective Time (i) who are not employed
by Lincoln or its Subsidiaries after the Effective Time or are terminated or
voluntarily resign as of a date within six months after the Effective Date after
being notified that, as a condition of employment, such employee must work at a
location more than 30 miles from such employee's former location of employment
or that such employee's salary will be materially decreased and (ii) who sign
and deliver a termination and release agreement in the form attached hereto as
Exhibit H, shall be entitled to severance pay equal to one week of pay, at their
rate of pay in effect at the Effective Time, for each full year of continuous
service with Citizens or its Subsidiaries or their successors not in excess of
26 years completed prior to the Effective Time or, in the case of employees who
continue as employees of Lincoln or its Subsidiaries after the Effective Time,
prior to their termination or resignation as such. Nothing in this Section 6.20
shall be deemed to limit or modify Lincoln's at will employment policy.
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Article VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger. The respective
obligation of each of Lincoln and Citizens to consummate the Merger is subject
to the fulfillment or written waiver by Lincoln and Citizens prior to the
Effective Time of each of the following conditions:
(a) Shareholder Approval. This Agreement and the actions and
transactions contemplated hereby shall have been duly adopted by the
affirmative vote of the holders of the requisite number of the
outstanding shares of Citizens Common Stock entitled to vote thereon in
accordance with applicable law, the Citizens Articles and the Citizens
By-laws, and the actions and transactions contemplated in the Merger
Agreement for Subsidiary Merger shall have been duly adopted by
Citizens and Lincoln, acting in their respective capacities as sole
shareholder of Citizens Savings Bank and Lincoln Savings Bank.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications
to, all Governmental Authorities required for the consummation of the
Merger and the Subsidiary Merger, and for the prevention of any
termination of any material right, privilege, license or agreement of
either Lincoln or Citizens or their respective Subsidiaries, shall have
been obtained or made and shall be in full force and effect and all
waiting periods required by law shall have expired; provided, however,
that none of the preceding shall be deemed obtained or made if it shall
be subject to any condition or restriction the effect of which would
have been such that Lincoln would not reasonably have entered into this
Agreement had such condition or restriction been known as of the date
hereof.
(c) Third Party Consents. All consents or approvals of all persons,
other than Governmental Authorities, required for or in connection with
the execution, delivery and performance of this Agreement and the
consummation of the Merger shall have been obtained and shall be in
full force and effect, unless the failure to obtain any such consent or
approval is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Surviving Corporation.
(d) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the transactions contemplated by this
Agreement.
(e) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending
the effectiveness of the Registration
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Statement shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the SEC.
(f) Blue Sky Approvals. All permits and other authorizations under the
federal and state securities laws (other than that referred to in
Section 7.01(e)) and other authorizations necessary to consummate the
transactions contemplated hereby and to issue the shares of Lincoln
Common Stock to be issued in the Merger shall have been received and be
in full force and effect.
(g) Listing. The shares of Lincoln Common Stock to be issued in the
Merger shall have been approved for listing on the National Market
System of NASDAQ, subject to official notice of issuance.
7.02 Conditions to Obligation of Citizens. The obligation of Citizens to
consummate the Merger is also subject to the fulfillment or written waiver by
Citizens prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Lincoln set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Effective Date as though made
on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct only as of such date), and
Citizens shall have received a certificate, dated the Effective Date,
signed on behalf of Lincoln by a senior officer of Lincoln to such
effect.
(b) Employee Matters. Either (1) Lincoln Savings Bank and Fred W.
Carter shall have entered into a mutually acceptable Consulting
Agreement as provided in Section 6.19(d) above or (2) Lincoln Savings
Bank shall have offered to enter into the Consulting Agreement attached
hereto as Exhibit E and Mr. Carter shall not have accepted such offer.
Lincoln and its Subsidiaries shall have amended their FIRF Plan and
other employee benefit plans, if and to the extent such amendments are
required by, and subject to the conditions provided in, Sections 6.17
and 6.19(a) above.
(c) Performance of Obligations of Lincoln. Lincoln shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and Citizens
shall have received a certificate, dated the Effective Date, signed on
behalf of Lincoln by the Chief Executive Officer and the Chief
Financial Officer of Lincoln to such effect.
(d) Opinion of Counsel. Citizens shall have received an opinion, dated
the Effective Date, of Bose McKinney & Evans LLP, counsel to Lincoln,
in substantially the same form as that attached hereto as Exhibit F.
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(e) Tax Opinion of Citizens' Counsel. Citizens shall have received an
opinion of Barnes & Thornburg, counsel to Citizens, to the effect that
(1) the Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (2) no gain or loss will be recognized by
shareholders of Citizens to the extent they receive shares of Lincoln
Common Stock as Consideration in exchange for shares of Citizens Common
Stock.
(f) Accountants' Letters. Citizens shall have received the letters
referred to in Section 6.14 from Olive LLP, Lincoln's independent
auditors.
(g) Trident Fairness Opinion. Citizens shall have received the opinion
of Trident, dated the date of the Proxy Statement (which shall be
appended as an exhibit thereto), and an updated opinion of Trident as
of the Effective Date, that the Consideration to be received in the
Merger by the shareholders of Citizens is fair to the shareholders of
Citizens from a financial point of view.
7.03 Conditions to Obligation of Lincoln. The obligation of Lincoln to
consummate the Merger is also subject to the fulfillment or written waiver by
Lincoln prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Citizens set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Effective Date as though made
on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct only as of such date) and
Lincoln shall have received a certificate, dated the Effective Date,
signed on behalf of Citizens by the Chief Executive Officer and the
person acting as the chief financial officer of Citizens to such
effect.
(b) Employee Matters. Fred W. Carter shall have made the acknowledgment
and binding commitment provided for in Section 6.19(c) above, in form
and substance satisfactory to Lincoln, so that the obligations assumed
by Lincoln Savings Bank in respect of Mr. Carter's employment agreement
with Citizens Savings Bank are limited to those set forth in Section
6.19(c) above.
(c) Performance of Obligations of Citizens. Citizens shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time,
and Lincoln shall have received a certificate, dated the Effective
Date, signed on behalf of Citizens by the Chief Executive Officer and
the Chief Financial Officer of Citizens to such effect.
(d) Opinion of Counsel. Lincoln shall have received an opinion, dated
the Effective Date, of Barnes & Thornburg, Counsel to Citizens, in
substantially the same form as that attached hereto as Exhibit G.
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(e) Tax Opinion of Lincoln's Counsel. Lincoln shall have received an
opinion of Bose McKinney & Evans LLP, counsel to Lincoln, dated the
Effective Date, to the effect that the Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code.
(f) Accountants' Letters. Lincoln and its directors and officers who
sign the Registration Statement shall have received the letters
referred to in Section 6.14 from Olive LLP, Citizens' independent
auditors.
Article VIII
Termination
8.01 Termination. This Agreement may be terminated and the Merger may be
abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Lincoln and Citizens, if the Board of Directors of
each so determines by vote of a majority of the members of its entire
Board.
(b) Breach. At any time prior to the Effective Time, by Lincoln or
Citizens, in each case if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event of
either: (1) a breach by the other party of any representation or
warranty contained herein, which breach cannot be or has not been cured
within 30 days after the giving of written notice to the breaching
party of such breach; or (2) a breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach and which breach would be reasonably
likely, individually or in the aggregate, to have a Material Adverse
Effect on the breaching party.
(c) Delay. At any time prior to the Effective Time, by Lincoln or
Citizens, in each case if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event that the
Merger is not consummated by December 31, 2000, except to the extent
that the failure of the Merger then to be consummated arises out of or
results from the action or inaction of the party seeking to terminate
pursuant to this Section 8.01(c).
(d) No Approval. By Citizens or Lincoln, in each case if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (1) the approval of any Governmental
Authority required for consummation of the Merger and the other
transactions contemplated by this Agreement shall have been denied by
final non- appealable action of such Governmental Authority or (2) the
shareholder approval contemplated by Section 6.02 herein is not
obtained.
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(e) Failure to Recommend, Etc. By Lincoln, if (1) prior to the
effectiveness of the Registration Statement, the Board of Directors of
Citizens shall not have recommended adoption and approval of this
Agreement to its shareholders, or (2) at any time prior to the receipt
of the approval of Citizens' shareholders contemplated by Section
7.01(a), Citizens' Board of Directors shall have withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse to the interests of Lincoln (whether in accordance with Section
6.02 or otherwise).
(f) Acceptance of Superior Proposal. By Citizens, if, without breaching
Section 6.06, Citizens shall contemporaneously enter into a definitive
agreement with a third party providing for an Acquisition Proposal on
terms determined in good faith by the Citizens Board, after consulting
with and considering the advice of Citizens' outside counsel and
financial advisors, to constitute a Superior Proposal; provided, that
the right to terminate this Agreement under this Section 8.01(f) shall
not be available to Citizens unless it delivers to Lincoln (1) written
notice of Citizens' intention to terminate at least five days prior to
termination and (2) simultaneously with such termination, the Fee
referred to in Section 8.03.
8.02 Effect of Termination and Abandonment. In the event of termination of this
Agreement and the abandonment of the Merger pursuant to this Article VIII, no
party to this Agreement shall have any liability or further obligation to any
other party hereunder except (a) as set forth in Sections 8.03 and 9.01 and (b)
that termination will not relieve a breaching party from liability for any
willful breach of this Agreement giving rise to such termination.
8.03 Termination Fee. If (1) Lincoln terminates this Agreement pursuant to
Section 8.01(e) or (2) Citizens terminates this Agreement pursuant to Section
8.01(f), then, within five business days of such termination, Citizens shall pay
Lincoln by wire transfer in immediately available funds a fee of $500,000 (the
"Fee"). If Citizens terminates this Agreement for any reason other than pursuant
to Section 8.01(b) (at a time when Lincoln could not also terminate pursuant to
Section 8.01(b)), or if this Agreement is terminated solely by reason of the
failure of Citizens to receive shareholder approval of the Merger, and if,
within twelve months of the date of such termination by Citizens, a change in
control of Citizens is consummated, then Citizens shall pay the Fee to Lincoln
by wire transfer in immediately available funds. (For purposes of this Section
8.03, a "change in control" shall be deemed to have taken place if: (w) any
person or entity, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, other than Citizens itself, a Subsidiary
thereof, or any employee benefit plan of Citizens or any of its Subsidiaries, is
or becomes the beneficial owner, directly or indirectly, of securities
representing fifty percent (50%) or more of the then-issued and outstanding
common stock of Citizens or the combined voting power of the then- outstanding
securities of Citizens, whether through a tender offer or otherwise; (x) there
occurs any consolidation or merger in which Citizens is not the continuing or
surviving corporation (except for a merger in which the holders of Citizens'
common and/or other voting stock immediately prior to the merger have the same
proportionate ownership of common and/or other voting stock of the surviving
corporation immediately after the merger); (y) there occurs any consolidation or
merger in which Citizens is the surviving corporation but in which shares of its
common and/or other voting
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stock would be converted into cash or securities of any other corporation or
other property; (z) there occurs any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially all
of the assets of Citizens.) Notwithstanding the foregoing, no Fee shall be
required to be paid if Lincoln or Citizens terminates this Agreement solely
because of Citizens to obtain the shareholder approval of this Agreement and the
actions and transactions contemplated hereby.
Article IX
Miscellaneous
9.01 Survival. None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, other than those contained in Sections 6.05(b), 8.02, and 8.03 and in
this Article IX, shall survive the termination of this Agreement if this
Agreement is terminated prior to the Effective Time. None of the
representations, warranties, covenants and other agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained in Sections 6.13 and 6.20 which by their terms apply or
are to be performed in whole or in part after the Effective Time and this
Article IX.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (a) waived by the party benefitted by the provision, or (b)
amended or modified at any time, by an agreement in writing executed by both
parties, except that, after approval of the Merger by the shareholders of
Citizens, no amendment may be made which under applicable law requires further
approval of such shareholders without obtaining such required further approval.
9.03 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Indiana applicable to contracts made
and to be performed entirely within such State.
9.05 Expenses. Subject to Sections 8.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing and postage expenses and SEC
registration fees shall be shared equally between Citizens and Lincoln.
9.06 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given (a) on the date of delivery,
if personally delivered or telecopied (with confirmation), (b) on the first
business day following the date of dispatch, if delivered by a
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recognized next-day courier service, or (c) on the third business day following
the date of mailing, if mailed by registered or certified mail (return receipt
requested), in each case to such party at its address or telecopy number set
forth below or such other address or numbers as such party may specify by notice
to the parties hereto.
If to Citizens, to:
Fred W. Carter, President
Citizens Savings Bank of Frankfort
60 South Main Street
Frankfort, Indiana 46041
Facsimile: (765) 654-7313
With a copy to:
Claudia V. Swhier, Esq.
Barnes & Thornburg
111 South Meridian Street
Indianapolis, Indiana 46204
Facsimile: (317) 231-7433
If to Lincoln, to:
T. Tim Unger, President
Lincoln Federal Savings Bank
1121 East Main Street
Plainfield, Indiana 46168
Facsimile: (317) 839-6775
With a copy to:
David A. Butcher, Esq.
Bose McKinney & Evans LLP
2700 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, Indiana 46204
Facsimile: (317) 684-5173
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
(together with the Disclosure Schedules and the Exhibits hereto) represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and this Agreement supersedes any and all other oral or
written agreements heretofore made. Except for Sections 2.01(d), 6.10, 6.13, and
6.20 hereof (which are intended to be for the benefit of those present and
former officers,
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directors, and employees of Citizens and its Subsidiaries affected thereby and
may be enforced by such persons), nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CITIZENS BANCORP LINCOLN BANCORP
("Citizens") ("Lincoln")
By: /s/ Fred W. Carter By: /s/ T. Tim Unger
----------------------- ------------------
Printed: Fred W. Carter Printed: T. Tim Unger
Title: President Title: President
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Each of the undersigned directors of Citizens hereby (a) agrees in his
capacity as a director to recommend to Citizens' shareholders the approval of
this Agreement and the Merger, except as otherwise provided in Sections 6.02 and
6.06 of this Agreement, and (b) agrees in his individual capacity to vote his
shares of Citizens common stock that are registered in his personal name (and
agrees to use his best efforts to cause all additional shares of Citizens Common
Stock owned jointly with any other person or by his spouse or over which he has
voting influence or control to be voted) in favor of this Agreement and the
Merger. In addition, each of the undersigned directors hereby agrees not to make
any transfers of shares of Citizens with the purpose of avoiding his agreements
set forth in the preceding sentence.
Dated this 21st day of March, 2000.
/s/ Robert F. Ayres
--------------------------
Robert F. Ayres
/s/ Fred W. Carter
--------------------------
Fred W. Carter
/s/ Perry W. Lewis
--------------------------
Perry W. Lewis
/s/ John J. Miller
--------------------------
John J. Miller
/s/ Billy J. Wray
--------------------------
Billy J. Wray
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List of Exhibits
Exhibit Title
A Form of Articles of Merger
B Form of Subsidiary Merger Articles of Combination
C Form of Merger Agreement for Subsidiary Merger
D Form of Affiliate Agreement
E Form of Consulting Agreement
F Form of Opinion of Lincoln's Counsel
G Form of Opinion of Citizens' Counsel
H Form of Termination and Release Agreement
52
NEWS RELEASE
For Additional Information, contact:
Lincoln Bancorp Citizens Bancorp
- --------------- ----------------
T. Tim Unger, President Fred W. Carter, President
(317) 839-6539 (765) 654-8533
LINCOLN BANCORP AND CITIZENS BANCORP
ANNOUNCE SIGNING OF MERGER AGREEMENT
PLAINFIELD, INDIANA and FRANKFORT, INDIANA -- MARCH 21, 2000 -- Lincoln
Bancorp (NASDAQ-NM: LNCB), headquartered in Plainfield, Indiana, and Citizens
Bancorp (OTC: CIBC), headquartered in Frankfort, Indiana, jointly announced
today that they have signed a definitive agreement providing for the acquisition
of Citizens Bancorp, a $63 million savings and loan holding company, by Lincoln
Bancorp, a $411 million savings and loan holding company. Lincoln Bancorp is the
parent company for Lincoln Federal Savings Bank and Citizens Bancorp is the
parent company for Citizens Savings Bank of Frankfort.
Under the terms of the agreement, each shareholder of Citizens Bancorp
would receive .9375 shares of Lincoln Bancorp common stock plus $9.375 in cash
for each share of Citizens Bancorp common stock owned by such shareholder. Based
on the closing price of Lincoln Bancorp on March 20, 2000 of $9.75, the
transaction is valued at $18.52 per share and has an aggregate value of
approximately $17.8 million (assuming all outstanding stock options of Citizens
Bancorp common stock are valued at the difference between the merger
consideration and the exercise price of the options). Citizens Bancorp's common
stock closed on the OTC Electronic Bulletin Board on March 20, 2000, at $12.25
per share. Approximately 900,000 shares of Lincoln common stock will be issued
in this merger.
This merger will be accounted for as a purchase transaction and Lincoln
expects the transaction to be accretive to earnings per share in the first year
following its completion.
The proposed merger is expected to be completed in the third quarter of
2000. The proposed merger is subject to the approval of the shareholders of
Citizens Bancorp and of the Office of Thrift Supervision and other customary
conditions. It is anticipated that the stock portion of the consideration will
be treated as a tax-free exchange.
Lincoln intends to resume its previously announced 10% stock repurchase
program. To date 415,600 shares of Lincoln common stock have been repurchased
under that plan, leaving 215,232 shares for repurchase. Depending on market
conditions and subject to required regulatory approvals upon filing an
application, and securities law restrictions, Lincoln may elect to repurchase
additional shares to be issued in the merger, in excess of its current
repurchase program.
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Following the completion of the transaction, Fred W. Carter, president
of Citizens Bancorp, will join the Board of Directors of Lincoln Bancorp and its
subsidiary, Lincoln Federal Savings Bank. Citizens Savings Bank of Frankfort
will merge into Lincoln Federal Savings Bank.
"We believe that the merger with Citizens Bancorp strengthens our
position in the Frankfort, Indiana market as we increase our deposit base to
approximately 20% of the total market share in Clinton County" said T. Tim
Unger, President & CEO of Lincoln Bancorp. Unger also stated that "Citizens
Bancorp is a quality institution with philosophies similar to our own in
assisting, over the years, thousands of people with the American Dream of home
ownership. We look forward to providing a wide array of quality products and
services to customers with the combination of excellent staff from our
organizations."
Citizens Bancorp's President, Fred W. Carter, said, when announcing the
combination, "The joining of Citizens Bancorp with Lincoln Bancorp will allow us
to increase our number of banking locations and to offer a broader array of
products and services to our customers. We are excited about the opportunities
presented by this partnership, and we feel it is in the best interests of our
shareholders, customers and employees, as well as the communities we serve."
Upon completion of the merger, Lincoln Bancorp will have total assets
of approximately $468 million and will operate seven banking offices in
Hendricks, Clinton, Montgomery and Morgan Counties, in Indiana.
Trident Securities is serving as Citizen's financial advisor and has
delivered a fairness opinion to its Board of Directors. Keefe, Bruyette & Woods,
Inc. is serving as Lincoln's financial advisor and has delivered a fairness
opinion to its Board of Directors.
Statements contained in this press release that are not historical
facts may constitute forward- looking statements (within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended) which involve
significant risks and uncertainties. The companies intend such forward- looking
statements to be covered in the Private Securities Litigation Reform Act of
1995, and are including this statement for purposes of invoking these safe
harbor provisions. The companies' ability to predict results or the actual
effect of future plans or strategies is inherently uncertain and involves a
number of risks and uncertainties, some of which have been set forth in the
companies' most recent annual reports on Form 10-K, which disclosures are
incorporated by reference herein. The fact that there are various risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements.
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